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Issa brothers face competition hurdle over dozens of garages near Asda stores

Laura Onita
·2-min read
Zuber (left) and Mohsin Issa 
Zuber (left) and Mohsin Issa

The billionaire brothers seeking to buy Asda own scores of petrol stations close to its supermarkets, according to new figures likely to spark scrutiny by competition watchdogs.

Zuber and Mohsin Issa's company EG Group has 173 forecourts in towns and cities where there are large Asda branches, most of which also have petrol stations.

This overlap is likely to be examined by the Competition and Markets Authority (CMA) to ensure that the tie-up will not reduce rivalry between petrol suppliers in a way that pushes up prices at the pump. It could order some sites to be sold.

The Issas emerged as surprise frontrunners to buy Asda this week in a £6.5bn deal supported by British private equity firm TDR Capital. They are now in exclusive talks with the grocer's US owner Walmart.

According to property consultant Altus, more than two fifths of EG Group's 396 UK sites are in a town or city that also has an Asda supermarket.

An EG Group garage in Blackburn
An EG Group garage in Blackburn

Asda could face another competition investigation of the kind that scuppered a £10bn bid to merge with Sainsbury's. That proposal was vetoed last year by the watchdog. 

Andrew Taylor, who offers advice on competition investigations and co-founded Aldwych Partners, said: “While a deal might not result in Asda and EG merging their networks, they would still be connected. The CMA could require them to sell those petrol stations."

Mr Taylor said that until about eight years ago, the watchdog’s involvement in the sector was rare but it has been scrutinising more deals after a flurry of activity in recent years. 

The CMA has investigated at least a quarter of all petrol station deals. More than half involved acquisitions by competitors MFG, MRH and EG Group, Mr Taylor said. 

EG operates forecourts under the Esso, BP and Shell brands. It is owned by the Issas and TDR but is not directly involved in the Asda bid.

Asda performance under Walmart
Asda performance under Walmart

Clive Black, a retail analyst at broker Shore Capital, said: “Whether or not the TDR/Issa vehicle can be considered separate to or a concert party to Euro Garages will need to be considered."

Mr Black said it is unlikely that the watchdog will launch a full-blown investigation but cited its lengthy scrutiny of  Poundland's 2016 takeover of 99p Stores as evidence that regulators sometimes intervene unexpectedly. 

After initially exploring an approach bid through the petrol station firm, the Blackburn brothers opted to back a bid by TDR using their personal fortune.

A source close to the deal stressed that the Issa brothers together with the private equity firm are tabling an offer, and not EG Group, so the watchdog is less likely to intervene. 

Walmart, EG Group and the CMA all declined to comment.