A major development has occurred in the retail industry as one of the key co-owners of Asda, Zuber Issa, has sold his stake to private equity firm TDR Capital. This transaction results in TDR becoming the majority owner of the supermarket group, with a controlling 67.5% stake.
The deal is expected to be finalized in the third quarter of this year, according to a statement released by Asda. Private equity firms typically acquire businesses, invest in them to improve their financial performance, and then seek to sell them for a profit. However, this approach has been met with criticism for its emphasis on profit, potentially leading to negative effects for employees if a business fails.
Asda has assured that it only uses the “dismiss and reengage” practice as a last resort, in which an employee is given the option to accept potentially weaker contract terms or be let go. The company’s ownership structure has also been under scrutiny in recent years, with members of Parliament questioning the involvement of multiple entities and offshore registrations.
The remaining owners of Asda are Walmart, the previous owner who still holds a 10% stake, and Mohsin Issa, Zuber’s brother, who retains a 22.5% stake. The Issa brothers, who are billionaires, acquired Asda from Walmart for £6.8bn in 2020 with the support of TDR Capital. They also own the petrol forecourt and filling station company EG Group, in which TDR also has a stake.
As part of this latest development, Zuber Issa will step down as co-CEO of Asda, and Mohsin Issa will become the sole CEO. In a statement, Zuber expressed his confidence in TDR’s continued investment in Asda and his belief that the company will achieve its growth ambitions.
“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 endeavors,” Zuber stated. “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.”