Asda owners shrug off £9bn debt pile and size up £8bn Subway take over
The billionaire owners of supermarket Asdaare reportedly sizing up an £8bn takeover of global sandwich maker Subway.
According to reports in The Sun, billionaire’s Mohsin and Zuber Issa are understood to be eyeing up the 44,000 restaurant chain.
The pair, who gained their notoriety as the founders of forecourt business EG Group, already have Subway branches at there 6,300 petrol stations globally – which includes 340 filling stations in the UK.
A source close to the brothers told the outlet that the pair believed that Subway had not recognised their “massive growth”.
They said: “EG Group have felt for a while that Subway treated them the same way as other franchise partners and their massive growth hadn’t been appreciated. So what better way to show who’s boss than owning them.”
The Lancashire born brothers launched an acquisition spree around the same time of its £6.8bn takeover of Asda in 2021.
Since then they have snapped up fast food chain Leon, 132 Co-op petrol stations and also explored a bid for chemist Boots.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown,told City A.M: “Asda has got back on track after a disappointing pandemic performance and has gained ground by bigging up its value offer amid cost-of-living headwinds.”
“This turnaround is likely to have spurred the ISSA brothers on to consider fresh acquisitions and Subway looks appetising. It fits in with drive for value and convenience and already a slice of their petrol forecourt stores house the sandwich franchise.
She continued: “The leap from large franchisee to owner is a big one however, and although the chain is proving popular the brand could do with a refresh, particularly its older more tired high street outlets. Although refurb costs would also be borne by franchisees, it would also require central investment.”
While the brothers appear to be keen to gain market share on British highstreet staples, many have questioned the scale of the debt burden which has been dangling over EG Group.
Earlier this month, Asda launched a £8.6bn review of its property estate as the brothers scrambled for options to reduce their £9bn debt pile.
As part of the process, it’s understood that Asda owners will look to hold on to a “sizable underpin of freehold properties” even if that means some of its sites are sold to investors and then leased back.