EG Group has agreed to sell its remaining UK forecourt business and certain standalone foodservice locations for £228m to co-founder Zuber Issa.
As part of the transaction, EG Group will retain bakery business Cooplands and its Starbucks franchise business.
The group also operates KFC, Subway, Krispy Kreme and Greggs franchises in the UK, though it is unclear at the time of writing whether these would come under the control of Zuber as part of the deal. The ownership of Leon, which was acquired by EG in 2021, is also unclear. The group also operates Chaiiwala, Chinnabon and Sbarro in the UK.
On completion of the transaction, Zuber will step down as co-CEO of EG Group, with Mohsin Issa continuing to lead the business as sole CEO. He will retain his existing shareholding in the company and remain on the board as a non-executive director.
TDR Capital and Mohsin’s shareholdings in EG Group also remain unchanged.
At the same time, TDR Capital has increased its investment in Asda by acquiring Zuber’s share in the business, with the transaction is set to complete in Q3 2024. The deal brings the ownership of Asda to 67.5% by TDR Capital, 22.5% by Mohsin Issa, and 10% by Walmart Inc.
Lord Stuart Rose, chairman of EG Group, said: “On behalf of the board of EG Group, I would like to thank Zuber for his incredible leadership, which has been central to building one of the largest and most entrepreneurial private companies in the UK.
“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. I look forward to continuing to work with Mohsin and Zuber on the Board of EG Group as we focus on growing the international business and ensuring EG plays a key role in the energy transition.”
Mohsin Issa CBE and Zuber Issa CBE, co-founders and co-CEOs of EG Group, said: “We have had an amazing journey together building EG Group over the last 20 years and we look forward to continuing to work closely together as fellow board members and shareholders in EG Group.
“The company is well positioned for future growth and success, with a strong international portfolio and a growing EV business. We are both – and the wider board – laser-focused on our key growth opportunities. Encouragingly, following the significant progress to strengthen our balance sheet, we have a capital structure which allows us to take advantage of the opportunities ahead of us continuing to deliver our best-in-class services to our customers around the world.
“Given our shared background in building great businesses, the board and everyone at EG understand Zuber’s desire to return to his entrepreneurial UK roots by acquiring the remaining UK forecourt business including new-to-industry developments and certain standalone food service concessions – as well as dedicating more time to his family and our charitable activities.
Following Michael Bradley’s decision to step down as group CFO role, Russell Colaco will join as global chief financial officer.
EG Group will use the proceeds from the divestment to pay down debt and strengthen its balance sheet following the significant deleveraging and refinancing activity last year.
The transaction is expected to complete in the second half of 2024.
Zuber and Mohsin co-founded EG Group in 2001 and under their leadership, the business has grown from a single site in the north of England to a global company with more than 5,500 locations.
With a diversified portfolio across three continents – North America, Europe and Australia – EG Group continues to roll out foodservice, and grocery and merchandise to create multi-purpose convenience retail sites across its international estate.
EG 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.
The group will continue to deliver its strategy to deploy emerging fuels and EV chargers, under its proprietary brand, evpoint, across the existing site network, as well as third-party locations.
For the 12 months to 31 December 2023, the group delivered revenues c. of $25bn and pro forma EBITDA of $1.1bn with a sustainable capital structure to support investment in future growth.
Skadden, Arps, Slate and Meagher & Flom (UK) LLP, Rothschild & Co, EY and PwC supported EG Group on the transaction.
