Dive Brief:
- Multiple outlets have reported in recent days that EG Group, the Blackburn, U.K.-based owner of EG America, is looking to sell assets in an effort to relieve debt.
- A report from Sky News on Jan. 19 said that EG Group had hired bankers from retail investment banker Eastdil to “explore the disposal of a package of its U.S. operations.” Two days later, The Sunday Times reported that EG Group’s owners are considering merging Asda — the U.K. supermarket chain they also own — with EG’s U.K. forecourt business in a deal that would create a retail giant worth around $14 billion.
- With EG operating nearly 1,800 locations across 33 U.S. states, a potential sale of these assets or a merger of them with Asda as well promises to have massive implications across the c-store and fuel industries.
Dive Insight:
This isn’t the first time EG Group has reportedly explored a sale of its assets. Last April, the Wall Street Journal reported that the retailer was in merger talks with Alimentation Couche-Tard — parent company of Circle K — in a move that would combine EG’s network in the U.K., U.S., western Europe and Australia with Couche-Tard’s in the U.S., Canada, northern Europe and other countries. No deal was made for undisclosed reasons.
As last year came to a close, EG may have hinted that a move — not necessarily with Couche-Tard — was on the horizon. In its most recent quarterly update to shareholders, the retailer said it’s “committed to reducing total net leverage through debt reduction and free cash flow generation, with the Group actively exploring deleveraging options.”
According to the Sunday Times report, EG has about $8.6 billion of debt falling due in 2025, and by merging with jointly owned Asda, its owners could likely refinance the debt on better terms. If the merger with Asda were to go through, it would create a group with 581 supermarkets, 700 petrol forecourts and more than 100 convenience stores in the U.K., according to the Sunday Times.
Both EG and Asda are jointly owned by brothers Mohsin and Zuber Issa and London-based private equity firm TDR Capital.
Meanwhile, the Sky News report noted that if EG were to sell its U.S. assets, the sale is likely to be structured as sale-and-leaseback deals, and could raise a substantial sum during the coming months.
EG declined to comment on the reports when contacted by C-Store Dive.
EG Group burst onto the scene in the U.S. in 2018 when it acquired Kroger’s 762-site c-store network, thus becoming EG America domestically. Five years later, it has grown into one of the largest c-store players in the U.S, operating under banners such as Certified Oil, Fastrac, Kwik Shop, Loaf N’ Jug, Quik Stop, Sprint Food Stores, Tom Thumb and Turkey Hill.
Beyond its nearly 1,800 c-stores and gas stations in the U.S., EG Group operates more than 6,300 sites globally.
