Asda - comment

The EG purchase has been done and looks better than we expected. Out-of-the-box leverage in the combined entity is 4.3x. The debt portion of the £2.3bn acquisition is priced at around 11%, in line with where the SSNs are trading. There is a 20% equity cheque (£450m), which was a pleasant surprise. The £100m of synergies (on <£200m of EBITDA will be a stretch, even over two years. The purchase of EG's UK assets will attract the attention of the CMA, and certain forecourts may be lifted out of the deal. If EG would keep these assets is not clear. Asda had its Q1 trading update call today.