Asda takeover could lead to higher petrol prices, warns competition…
Billionaire Issa brothers’ £7billion takeover of Asda could send petrol prices soaring in 36 parts of the UK, watchdog warns
- Mohsin, 49, and Zuber Issa, 48, completed £6.8bn purchase of Asda in February
- All of Asda’s forecourts were sold to the brothers’ petrol station firm EG Group
- Competition and Markets Authority (CMA) launched probe into the deal
- Considered if tie-up would result in a ‘substantial lessening of competition’
- Now, the CMA said that investigations have raised ‘local competition concerns’
ASDA’s takeover by the billionaire Issa brothers could send petrol prices soaring in 36 parts of the UK, a watchdog has warned.
Mohsin, 49, and Zuber Issa, 48 – who have made a fortune by revamping petrol station forecourts – completed their £6.8billion purchase of Asda in February.
All of Asda’s 323 forecourts were sold to the brothers’ petrol station firm Euro Garages (EG) Group for an additional £750million.
The Competition and Markets Authority (CMA) formally launched an initial phase one probe into the deal to consider whether the tie-up would result in a ‘substantial lessening of competition’.
Now, the CMA said that investigations have raised ‘local competition concerns in relation to the supply of road fuel in 36 areas across the UK’.
In one other area, the authority has specific concerns regarding the supply of a type of fuel called auto-LPG.
It said the buyers now have five working days to offer a solution to address these competition concerns.
ASDA’s takeover by billionaire brothers Mohsin, 49, (left) and Zuber Issa, 48, (right) could send petrol prices soaring in 36 parts of the UK, a watchdog has warned
The regulator said it will then have a further five days to consider whether it will accept these terms to or call for a more thorough investigation.
The brothers intend to replace Asda food aisles with cafes, hair salons and nail bars, as part of a larger plan to keep people shopping for longer, according to The Sunday Times.
The children of immigrants who moved to Blackburn from Gujurat, India, in the 1970s, Mohsin and Zuber now have franchise agreements with brands including Starbucks, Subway and KFC.
The Blackburn-born siblings were recently locked in secret talks to buy Topshop before it became part of the Asos portfolio.
The Issa brothers’ estate includes a £25m Kensington townhouse and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump’s personal helicopter.
They are also building five identical mansions just three miles from the £115,000 Blackburn two-up two-down where they were raised.
Mohsin is expected to live there with his wife, Shamim with whom he shares two grown-up children.
The brothers’ petrol station firm Euro Garages Group operates 395 petrol stations – while Asda owns 323 sites (one pictured in Swansea)
The Issa brothers say Asda will undergo a £1billion transformation, stating earlier this year: ‘Looking ahead, and subject to the required regulatory approvals, we look forward to working with our Asda colleagues to build an even stronger, more differentiated retailer – including through the investment of more than £1 billion in the next three years to further strengthen the business and its supply chain.
‘We are also excited about the proposed integration of the Asda forecourts into EG’s established UK operations, which we believe would underpin the future growth of the combined network.’
Joel Bamford, senior director of mergers at the CMA, said: ‘Our job is to protect consumers by making sure there continues to be strong competition between petrol stations, which leads to lower prices at the pump.
‘These are two key players in the market, and it’s important that we thoroughly analyse the deal to make sure that people don’t end up paying over the odds.
‘Right now, we’re concerned the merger could lead to higher prices for motorists in certain parts of the UK.
‘However, if the companies can provide a clear-cut solution to address our concerns, we won’t carry out an in-depth phase two investigation.’
A spokeswoman for the Issa brothers and TDR Capital said: ‘We will be working constructively with the CMA over the course of the next 10 days in order to arrive at a satisfactory outcome for all parties within phase one.
‘This would provide welcome certainty for our colleagues, suppliers and customers, and allow us to move forward with our exciting plans for investment and growth at Asda.’
From a terraced home in Blackburn to self-made billionaires: The rags-to-riches story of petrol station pioneer brothers
By Rory Tingle for MailOnline
Mohsin Issa, 49, and his brother Zuber, 48, whose parents came to Britain from India ‘with nothing’, built EG Group from one site bought for £150,000 in 2001 into a £9billion giant employing 44,000 staff.
The brothers are now worth an estimated £3.56bn, including a £25m Kensington townhouse and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump’s personal helicopter.
They are also building five identical mansions just three miles from the £115,000 Blackburn two-up two-down where they were raised. Mohsin is expected to live there with his wife, Shamim with whom he shares two grown-up children.
The brothers holding trophies at an awards ceremony in London in 2018, which saw them named EY Entrepreneur of the Year
The billionaire Issa brothers brothers and the rise and rise of EG Group
1970s – Mohsin and Zuber Issa’s parents arrive to the UK from Gujurat, India and the brothers are born not long afterwards in Blackburn, Lancashire.
They work at their parents’ petrol station before it closes.
2001 – The brothers buy their first filling station in Bury, Greater Manchester.
2015 – Private equity firm TDR Capital acquire a 50% stake in their Euro Garages chain.
2017 – Euro Garages buys EFR Group, a Dutch-based forecourt operator, and is renamed EG Group. The new company buys 1,000 garages from Esso in Germany.
2018 – EG Group announces it will buy 800 Kroger convenience stores in he US before buying 1,200 sites in Italy from Esso. Later that year it buys 97 fuel stations in the Netherlands and 540 from the Australian retailer Woolworths.
2019 – In another US expansion, EG buys 54 Fastrac sites in the US and 69 from Certified Oil.
2020 – EG becomes KFC’s largest franchisee in Europe after buying 145 KFC outlets in the UK & Ireland.
2021 – Takeover of Asda completes; the brothers look to buy Topshop but are pipped to the post by Asos
As the children of immigrants who moved to Blackburn from Gujurat, India, in the 1970s, Mohsin and Zuber Issa – who were born in the former mill town – quickly learned the importance of hard work.
Their first experience of business was selling petrol from their parents’ filling station, where they would have their big idea that would revolutionise the industry and make their millions.
Petrol sales were in decline and fuel duty on the rise, cutting into already wafer-thin fuel margins and leading to hundreds of operators leaving the market.
At the time most garages – if they sold food at all – offered a measly selection of pre-packaged sandwiches, crisps, sweets and chocolate.
But the Issas realised fuel sales still had a purpose in creating a captive market at petrol stations, who could then be offered appetising food rather than the gruel offered elsewhere
The brothers struck franchise agreements with brands including Starbucks, Subway and KFC, before embarking on a buying spree to snap up sites that had previously become vacant.
They now own Europe’s largest forecourt operator, Euro Garages, which in 2019 reported revenues of more than £17.9bn.
The firm is now the largest Subway franchisee in Europe and earlier this year bought a group of 146 KFC stores.
Describing the secret of their success, Zuber told the Financial Times: ‘We wanted to create a destination where you could get fuel, food-to-go and shopping.
‘This is the formula and it works.
‘We were fortunate that the big players were leaving the market just as we were growing.’
TDR Capital – a London investment firm behind We Buy Any Car and David Lloyd gyms – bought a 50% stake in EG Group in 2015.
The Issas retain the remaining 50%.
The £115,000 terraced house where the brothers grew up in Blackburn. They were born in the town after their parents moved from Gujurat, India
A wider view of the road in Blackburn where the brothers grew up. Their company is still based in the town
They are now worth an estimated £3.56bn, including a £25m Kensington townhouse (pictured) and a private jet that is kept in a hangar at Blackpool Airport alongside Donald Trump’s personal helicopter
Blackburn-born brothers who started out cleaning toilets have built £3.5bn petrol station business
They were brought up in a terraced house after their father came to Britain to work in the textiles industry.
Four decades on, Mohsin and Zuber Issa’s journey from the back streets of Blackburn to the top of the property ladder appears complete.
The self-made billionaires, who own Euro Garages, Europe’s biggest independent forecourt firm, have recently bought a £25million Knightsbridge mansion.
Their woollen mill worker father Vali and mother Zubeda were living at a two-up, two-down terraced house on Balaclava Street in Blackburn when Mohsin and Zuber were born in the early 1970s.
Euro Garages has a partnership with a several household name brands, including Spar, Greggs, Burger King, Subway and Starbucks.
It was founded by brothers, Zuber Issa and Mohsin Issa in 2001 with a single petrol filling station in Bury, Greater Manchester.
Just 15 years ago they were working in a petrol station in Halifax, doing the stock-taking and cleaning the toilets among other things.
They took a lease on a local garage with their combined savings of £5,000 and today they control a business with an estimated value of some £3.56billion.
This prompted a debt-fuelled buying spree that saw the brothers buy thousands of new sites and expand into eight other countries around the world.
‘They never in their wildest dreams would have imagined 5,500 gas stations in nine markets,’ senior executive Ilyas Munshi told the American trade magazine CSP last year.
‘If they had only 20 sites, they would have felt they had done their job.’
As proud Lancastrians, the brothers have insisted on keeping EG Group’s headquarters in Blackburn, and recently unveiled a new £35m headquarters.
‘People are always asking when we will move to London or Manchester,’ Zuber told the FT.
‘But the quality of life here is great. A lot of people do a few years in London then come to the North West.
‘They want to raise a family and have less pressure. We have got a lot of fantastic people that way.’
Mohsin has a wife Shamim, and their son and a daughter both work for EG.
Both brothers rarely give interviews and have adopted a low-key public profile.
They are now building five identical ‘super-sized’ homes three miles from their childhood home.
Despite the fierce opposition, which saw the council face 30 letters of complaint, eight old houses have now been demolished and builders have laid foundations for the five 5,000 sq ft mansions.
Plans for the large houses, which are located on a quiet rural road outside Blackburn where houses sell for up to £1 million, were lodged in April 2018.
They sparked an uproar, with the properties described as ‘not in fitting with the local area’ as the homes stand over 4.5 metres taller with 1,500 square metres of floor space.
But planning permission was granted and pictures taken earlier this year showed builders had already moved in.
In 2017, the pair purchased a £25million mansion in Knightsbridge, which estate agents said could be worth £80million when planned renovations are carried out according to estate agents.
Their Grade II listed Georgian house is also at the centre of a long-running planning row.
The previous owner began digging a basement and left a vast 30ft-deep crater the size of two tennis courts, described by horrified neighbours to ‘Hitler’s bunker’.
When finished the luxury 22,000 sq ft home will have a huge underground car park, a swimming pool, spa, and cinema.
The brothers donate 2.5% of their earnings to charity through the Issa Foundation, which funds hospitals and provides free breakfasts for children in Lancashire.
Architect’s plans for one of the five new homes that the brothers are building in countryside near Blackburn
Plans for the large houses, which are located on a quiet rural road outside Blackburn where houses sell for up to £1 million, were lodged in April 2018. They are currently a building site
Pictured: The homes on Billinge End Road, Blackburn, Lancashire, that was demolished in order to make way for the new houses
Despite the council being faced with 30 letters of complaint, the new buildings were given the green light. Pictured: The eight homes which were destroyed (left in red) and the new mansions which will be built (right in green)
The five new homes will stand over over 4.5 metres taller that the old homes with 1,500 square metres of floor space
Asda history: How Britain’s third-largest supermarket began as a Yorkshire family butcher
A newspaper article about one of the first ever Asda stores
1950s: The Asquith family (W.R. Asquith) open a butcher’s shop in Knottingly, West Yorkshire, which was eventually expanded to seven shops.
1958: They travel to the USA to visit Piggly Wiggly, probably the world’s first supermarket.
1963: The Asquiths open the UK’s first self-service supermarket in Wakefield, West Yorkshire.
1965: Peter Asquith built his first new supermarket from scratch, next to a large car park, knowing that cars would change the way people shop. Associated Dairies were employed to run the in-store butchery operation and the name Asda was born by combining ASquith and DAiries.
1966: Asda becomes the first major food store to sell general merchandise.
1968: Associated Dairies buys out the Asquith Brothers.
1999 Asda is bought by Walmart.
2020 (February): Walmart says it is looking for a buyer.
2021 (February): Issa brothers and their private equity backers announce their £6.8 billion acquisition of Asda has now been completed.
Source: Read Full Article