The billionaire brothers who part-own Asda have gone their separate ways, with Zuber Issa selling his shares in the supermarket to the private equity firm TDR Capital amid a rift between the siblings.
Zuber owned 22.5% of the Leeds-based grocery chain after a £6.8bn takeover alongside his older brother Mohsin and TDR three years ago. The sale of his stake had been expected for months, but was thought to have been complicated by lock-in agreements.
The transaction will complete between July and September, after which point TDR will increase its stake from 45% to 67.5%, while Mohsin keeps 22.5%. Asda’s former owner, the US retailer Walmart, retains its 10% stake.
The rift between the Issa brothers emerged after the breakdown of Mohsin’s marriage, which is said to have “sent shock waves” through the family. The brothers, who share a £5bn fortune, according to the Sunday Times rich list, grew up in a terrace house in Blackburn, Lancashire.
The pair, who are both in their 50s, made their fortune from petrol forecourts, starting their empire with one in Bury, Greater Manchester, after working in their father’s garage. After acquiring Asda in June 2021 with TDR, they folded part of their forecourts business, EG Group, into the supermarket chain last year.
It was also announced on Friday that EG Group has sold its remaining UK petrol stations to Zuber for £228m. He said he would focus on leading and managing these sites, and spend more time on charitable endeavours. “With Mohsin and TDR’s ongoing focus and shareholding, I am confident that Asda will achieve its growth ambitions,” he added.
This week, research from the RAC motoring group showed that Asda is now the UK’s most expensive supermarket fuel seller, after the retailer’s owners ditched its long-held pledge to be the cheapest on the market.
The GMB union said TDR taking a bigger stake would be bad news for shoppers and staff. Nadine Houghton, its national officer, said: “TDR Capital has serious questions to answer about their asset-stripping of Asda. 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.”
The Issas have faced persistent questions about the financing of their business empire, having pushed through debt-fuelled deals at EG Group.
They put just £100m of cash into the initial Asda deal, matched by £100m more from TDR Capital, with the remainder of the buyout funded with the largest sterling corporate bond sale on record, according to Bloomberg, as well as a loan from the parent company of EG Group.
Last October, Asda acquired part of EG Group’s UK business for £2bn, giving it 356 predominantly freehold sites, including modern convenience stores on petrol filling stations, and further blurring the lines between the businesses. The deal was funded by an additional £770m of new loans and £450m in new funds from the Issas and TDR.
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Mohsin Issa said: “Asda is an iconic British brand and we are committed to setting it up for long-term success and delivering great value for customers across the UK.”
In an apparent attempt to draw a line publicly under the family rift, he said: “I also 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 co-investments, family office philanthropy and Issa Foundation projects.”
Gary Lindsay and Tom Mitchell, managing partners of TDR Capital, defended their record at Asda, saying they had made “significant progress in transforming” the chain.
They added: “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.”
