Dealmakers: Brothers take different roads

It had been rumoured to be on the cards. But the announcement that Blackburn’s Issa brothers were going their separate ways was still a massive moment.

A raft of announcements in early June heralded the end of a close family partnership that had built a towering business empire.

It had its beginnings in 2001 when Zuber and Mohsin bought a run-down petrol station close to Bury town centre.

The brothers rise to the top saw them revolutionise the petrol forecourt sector and build their Blackburn headquartered Euro Garages brand into a global company, acquiring petrol stations, convenience stores and restaurants worldwide along the way.

However, their biggest business coup came in 2020 when the brothers and private equity firm TDR Capital joined forces to buy supermarket giant Asda from US giant Walmart for £6.8bn. Both Issas made the 2023 Sunday Times Rich List, placed as the fifth wealthiest in the North West.

Publicity-shy, there were few media interviews along the way. Though in March, Mohsin told the BBC that despite Asda’s heavy debt pile he was “here for the long haul”.

He also dismissed rumours of a rift with his brother Zuber, saying the pair “get on exceptionally well”.

He told the broadcaster: “We talk to each other probably two or three times a day. We’ve been very, very privileged. We have been on a journey and we have a long way still to go.”

Just three months later and the brothers were heading in different business directions. And here’s what the raft of announcements means for them and their future plans.

Zuber has sold his stake in supermarket giant Asda and acquired the forecourt division of the EG Group.

His share in Asda has been purchased by TDR Capital, increasing its holding to 67.5 per cent. Mohsin retains his 22.5 per cent share and Walmart holds the remaining 10 per cent.

At a price of £228m, Zuber has acquired the petrol forecourts business on which the EG Group’s success has been built, alongside a number of standalone foodservice locations.

He steps down as co-chief executive of the group, but retains his shareholding and will serve as a non-executive director. And he will also focus on his charity work. The EG Group, headed by Mohsin as sole chief executive, will now focus on its convenience food shops which span three continents: North America, Europe and Australia.

The group is the third-largest independent convenience retail chain globally, the fifth in the US, and second in Continental Europe and Australia.

The business will maintain a presence in the UK through Cooplands, its wholly-owned bakery business, the group’s rapidly growing charging business, evpoint, and its Starbucks franchise business.

In a statement, Zuber said: “Since Mohsin and I, alongside TDR, took ownership of Asda, we have driven a period of significant investment and entrepreneurial growth activity. Notably, Asda acquired a market-leading UK convenience retail and foodservice store business from EG Group.

“With the divestment of my Asda shares, I will now turn my attention towards leading and managing the remaining EG UK forecourt sites that I have personally acquired, and spend more time on my charitable endeavours.

“I am pleased to see TDR increasing its investment in Asda. With Mohsin and TDR’s ongoing focus and shareholding, I am confident that Asda will achieve its growth ambitions.”

Mohsin said: “I want to add my personal support and best wishes for Zuber’s plans as we continue our successful family partnership, working as partners on our personal coinvestments, family office philanthropy and Issa Foundation projects.”

Lord Stuart Rose, chairman of EG Group, also praised Zuber for his “incredible leadership”, which he said had been central to building one of the largest and most entrepreneurial private companies in the UK.

The former chairman of Marks and Spencer added: “EG Group is a UK success story on the global stage that has created significant opportunities for people in Blackburn and other local communities in the group’s international markets – and pioneered the foodservice model at the roadside.

“With Mohsin remaining as sole CEO, the business is in the right hands and well-placed for further success.”

Both deals are expected to complete in the second half of 2024. Asda is seeking a new chief executive and TDR says it remains focused on investing in its stores and online.

Gary Lindsay and Tom Mitchell, managing partners of TDR, are bullish and ambitious for the future of Asda under its control.

In a statement they said: “We first invested into Asda over three years ago, seeing a huge opportunity to cement its position as one of the UK’s leading retail brands.

“By combining our investment and sector expertise with Asda’s heritage of delivering value for customers, we have already made significant progress in transforming Asda.

“We have added a scale convenience business, grown Asda’s store footprint from 623 to 1,200 stores and food-to-go sites, and launched a hugely successful loyalty app, which now has six million active customers, accounting for around half of total sales.

“We remain focused on investing in Asda’s stores and online, as well as its colleagues through the highest pay in the traditional supermarket sector, to drive sustainable, long-term growth.

“As majority owners, we will continue to work closely with the Asda management team and colleagues across the business to support the ambitious strategy, which we believe is the right one to continue to move Asda forward.”

They also point to Asda’s recent successful refinancing of more than £3.2bn of its debt, which the retailer says reflects strong demand from investors and has pushed out the majority of its maturities into the next decade.

There was a less positive reaction from the GMB union, which declared TDR’s larger stake in Asda as “bad news” for shoppers and staff.

Nadine Houghton, GMB national officer, said: “Their private equity ownership has already been bad for consumers - with Asda now the most expensive retailer for fuel - and bad for staff, with millions of working hours cut from the shop floor.

“Further involvement from TDR can only spell more bad news. Bosses must change course to protect Asda workers and stop this British retailer further losing more market share.”