The boss of Asda has today insisted that the owners of the supermarket are still ‘in it for the long-haul’ despite reports that one of the billionaire Issa brothers who owns the business is looking for a way out.
At a hearing before Parliament in December, Mohsin Issa was questioned over his commitment to the decades-old firm he bought in 2021 in light of the complex offshore ownership structure which would help reduce the tax bill in the event it was sold. Mohsin Issa told MPs he was “in it for the long haul,” adding he was seeking to expand Asda’s store estate.
But it has since emerged that his brother Zuber is seeking to sell his 22.5% stake to private equity firm TDR Capital, which would give it majority control of the supermarket, leaving Mohsin with a 22.5% stake and US firm Walmart with a 10% share.
Asda CFO Michael Gleeson today told the Standard: “The shareholders look at this business and generally the businesses they invest in for the long-run.
“I’m not going to speculate on discussions over what Zuber might or might not do in the future.
“But the shareholders as a group do invest and grow businesses for the long run. Ours is a growth strategy and that will continue to be the case.”
Mohsin Issa is also seeking to step away from day-to-day management of the supermarket, which he had been running on an interim basis with Zuber.
Asda has yet to appoint a permanent CEO since the brothers took over the business, but Gleeson insisted the search was still on to find a CEO, adding he ruled himself out for the role.
Sales at the supermarket rose 7.1% to £21.9 billion in 2023 and its adjusted earnings jumped 24% to top £1 billion, the supermarket said today, as it was on course to open 500 of its new ‘express’ convenience stores across the country by the end of this year.
The majority of the stores relate to petrol station convenience stores that were opened following the acquisition of most of the UK petrol forecourts of EG Group, also owned by the Issas, though the supermarket also plans to open hundreds of High Street convenience stores in the medium-term.
But the firm’s share of the grocery market has dropped to 13.8% from 14.8% at the time of the takeover in 2021 as the supermarket lost ground in its battle with German rivals Aldi and Lidl.
“Clearly the discounters have made a significant progress, and Tesco and Sainsbury’s were able to defend that somewhat by expanding their convenience businesses, something Asda didn’t do,” Gleeson said.
“It is something we’ve now addressed and there is significant continued opportunity ahead of us.”
The firm, which was saddled with a heavy debt burden after its takeover by the billionaire Issa brothers, said its improved cashflow generation contributed to Asda reducing its total net leverage as a multiple of adjusted EBITDA to 3.0x from 3.9x, adding that the business was ‘fully committed’ to further deleveraging.
Its net debt position still stands at £3.8 billion, though Gleeson previously admitted to MPs that Asda would face an extra £30 million in interest payments this year after a portion of its debts were set to be refinanced at higher rates.
