Asda’s billionaire brothers make a bid for Caffè Nero

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LONDON: The billionaire brothers behind petrol forecourt business EG Group have made a bid for coffee shop chain Caffè Nero. The Issa brothers, who are also buying Asda for £6.8bn, made the offer over the weekend to Caffè Nero’s founder and controlling shareholder, Gerry Ford.

According to BBC report, the bid, which was first reported by Sky News, comes hours before the chain learns if landlords will agree to cut its rent bill amid a slump in trade. The Issas and Caffè Nero declined to comment.

Zuber Issa and Mohsin Issa

Caffè Nero – which owns 650 own-brand stores and 150 Harris & Hoole coffee shops – has been hit hard by the reduced footfall in city centres during the pandemic. This has forced it to seek a rescue deal – or company voluntary arrangement (CVA) – that could see some of its stores shut and rents cut on others. EG Group, which runs 6,000 petrol forecourts in Europe, the US and Australia, already has brand partnerships with the likes of Starbucks and KFC.

An insider said Caffè Nero, which employs 5,000 people, would be an obvious extension to the group. Under EG Group’s offer, Caffè Nero’s landlords would also be paid in full for any outstanding arrears, which landlords may find more attractive than the CVA.

The terms of the offer, which is at an early stage, are unclear and there is no guarantee it will lead to a deal. It is understood the Issa brothers would fund any takeover with cash, not debt.

In September, a consortium of Zuber and Mohsin Issa and private equity firm TDR Capital won the battle to buy Asda from its US owner Walmart. It means the grocer will return to majority UK ownership for the first time in two decades.

The Blackburn-based brothers were both made CBEs after the news. However, questions have been raised about the Issa brothers’ finances after EG Group’s auditor, Deloitte, suddenly quit in October and was replaced by KPMG.

At the time Deloitte did not say why it had stepped down, but EG Group said the auditor had signed a “clean audit” for EG

Group’s 2019 financial accounts and there had been “no disagreements on any auditing or accounting matters”.