Asda and EG Group £12bn merger would risk jobs and food supplies, union warns
A union representing workers at Asda has said a potential merger of the supermarket with EG Group’s UK petrol stations could risk jobs, food supplies and monopolise petrol stations across the UK.
The GMB Union wrote to Business Secretary Kemi Badenoch urging her to call in the competition regulator to investigate the possible multibillion pound deal.
According to reports, Asda and the UK division of EG Group, which have the same owners, could be combined in a bid to cut debts hampering the forecourt empire.
EG Group, one of the world’s biggest petrol station businesses, is due to refinance its £7 billion debt pile by 2025, at a time when interest rates have risen sharply.
Issa Brothers and their private equity backers at TDR Capital are believed to be pushing ahead with the plans to help them secure a better refinancing deal.
But nothing has been confirmed from either company, which both declined to comment on Thursday, or their owners.
GMB said allowing the merger to go ahead would be “deeply irresponsible” and risks posing a “potential threat to the critical and essential access to our food supply system, to fuel prices, and risks the jobs of over 100,000 employees”.
GMB represents retail and distribution workers across the “big four” supermarket chain, which hires more than 145,000 staff.
The concerns are that a merger could laden Asda with more debt, on top of the £4.7 billion net debt it reportedly already has.
The union likened the move to the demise of Debenhams, which fell into administration into 2019 having been saddled with some £1 billion in debt.
“Reckless financial engineering that risks these jobs must be subject to proper scrutiny and the owners held accountable for decisions which may impact this,” the letter read, signed by GMB’s national officer Nadine Houghton.
GMB said loading more debt on to one of the UK’s biggest supermarkets poses a risk to the nation’s food supply.
Merging the two businesses would result in an empire owning more than 700 petrol stations across the UK, which could create a monopoly and reduce competition on fuel prices, the union added.
“A ‘super retailer’ with such a heavy concentration of petrol forecourts could have a chilling effect on competition across the UK petrol market,” Ms Houghton said.
The union asks Ms Badenoch to ensure the Competition and Markets Authority (CMA) investigates a deal, should it go ahead.
Meanwhile, the CMA is looking at Asda’s decision to buy the petrol forecourt chain owned by rival retailer Co-op in a £600 million deal.
The regulator said last month it was considering accepting the plan to ease concerns, even after warning the deal could result in “higher prices or less choice” for drivers and shoppers across 13 sites.
Press Association – by Anna Wise