Despite reports that one of the billionaire Issa brothers, co-owners of Asda, is exploring a potential sale of his stake, the company’s CFO, Michael Gleeson, has affirmed the shareholders’ long-term commitment to the supermarket. During a Parliament hearing in December, Mohsin Issa expressed his dedication to Asda’s future and plans to expand its store network. However, it has emerged that his brother Zuber is seeking to sell his 22.5% stake to private equity firm TDR Capital, which could give the firm majority control of the supermarket. Mohsin Issa would retain a 22.5% stake, while US firm Walmart holds a 10% share.
Gleeson emphasized that the shareholders invest with a long-term perspective and are focused on growth. He declined to comment on Zuber’s potential sale, but stressed that the shareholders collectively prioritize long-term investment and growth strategies.
Asda recently reported strong financial performance for 2023, with sales rising 7.1% to £21.9 billion and adjusted earnings jumping 24% to over £1 billion. The supermarket aims to open 500 new express convenience stores across the country by year-end, primarily through the acquisition of petrol station convenience stores from EG Group, also owned by the Issas. Additionally, Asda plans to open hundreds of High Street convenience stores in the medium term.
Despite its growth plans, Asda’s share of the grocery market has declined from 14.8% at the time of the takeover in 2021 to 13.8%. Gleeson acknowledged the significant progress made by discounters and the efforts of Tesco and Sainsbury’s to defend their market share through convenience store expansion. Asda is now addressing this aspect of its business and sees significant opportunities for growth.
The company, which faced a heavy debt burden after its takeover by the Issa brothers, reported an improved cashflow generation contributing to a reduction in its total net leverage. Asda remains committed to further deleveraging, although it will face increased interest payments on a portion of its debts refinanced at higher rates.
