Asda has confirmed the acquisition of EG Group’s UK and Ireland operations for £2.27bn and said the move will create a “new value-led consumer champion”.

Asda, owned by the Issa brothers and TDR Capital, is acquiring EG Group’s British and Irish business, which includes 350 petrol stations and over 1,000 food-to-go locations through parent company affiliate Bellis Acquisition Company 3 Limited.

EG Group will retain around 30 petrol stations in the UK for “wider group development and which will not form part of the transaction”.

The grocer said the move will accelerate its strategic plans to create a value-led convenience offer by rolling out Asda Express across EG UK and Ireland estate.

Asda said it planned to invest more than £150m within the next three years of the transaction completing to “fully integrate the combined business” and said shareholders are providing around £450m of additional equity to fund the transaction.

Asda also said the acquisition would strengthen its financial profile, creating a group with combined revenues of nearly £30m. EG UK&I would contribute £195m EBITDA after rents, “additional P&L synergies of £100m” and could realise over £100m of working capital benefits as a result of its enlarged scale.

Asda said that Mohsin Issa will lead the business while it begins the search for a new group chief executive which it expects will take “several months”. 

The grocer also reported a 7.8% increase in like-for-like sales in the three months to the end of March compared with the previous year, while total revenues excluding fuel increased by 8% to £5bn.

Lord Stuart Rose, chair of Asda, said: “Asda’s acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen. Throughout my career in retail one thing has always been true – that meeting the evolving needs of customers is the route to growth.

“This transaction is all about driving growth by bringing Asda’s heritage in value to even more communities and accelerating the growth of its convenience retail business.”

Mohsin Issa, co-owner of Asda, said: “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt. The combination of Asda and EG UK and Ireland will be positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers.

“I would like to sincerely thank all colleagues at both businesses for their ongoing efforts to serve our customers during tough economic times, and I look forward to welcoming our new colleagues from EG UK and Ireland and expanding the Asda family further.”