The Issa brothers' EG Group has signed a £440m deal to buy 285 petrol stations in Germany amidst fears over its debt mountain. The acquisition from OMV is the second deal signed since Blackburn-based Zuber and Mohsin Issa bought Asda for £6.8 billion in October, and extends their business' 6,000- strong network of petrol stations and convenience stores.
It follows a Moody's decision to downgrade EG Group because of the way the company reports its £7 billon debt pile, as well as governance issues which prompted its auditor Deloitte to resign. The purchase of Asda, which is being investigated by the UK competition watchdog, will be Britain's largest leveraged buyout in more than a decade.
The Issas sold new preference shares – considered halfway between debt and traditional equity – in the firm to two Canadian pension funds and Abu Dhabi's sovereign wealth, in a deal that valued the firm at around £15 billion.
The deal was seen as a way of providing cash to help pay for Asda. The company said the acquisition was funded from existing cash reserves and loans, and would be 'leverage neutral'.
Fast-growing EG was founded by the Issa brothers in 2001, initially called Euro Garages and expanding out from a single site in Bury, Greater Manchester. Last month, it moved to buy Caffe Nero's 650-strong chain - a move dismissed by that company as "opportunistic". It has already established brand partnerships with the likes of Starbucks and KFC.
EG said the new outlets in Southern Germany would expand its presence in that country. It already operates sites there under the Esso fuel brand. Earlier this year, questions were raised about the company's finances after EG Group's auditor, Deloitte, suddenly quit in October and was replaced by KPMG. EG Group said the auditor had signed a "clean audit" for EG Group's 2019 financial accounts and there had been "no disagreements on any auditing or accounting matters".
