U.S.-based Walmart has agreed to sell its wholly-owned U.K. supermarket chain Asda - one of Britain's 'Big Four' grocers - to private equity group TDR Capital and the founders of petrol station operator EG Group for £6.8bn ($8.8bn) on a debt-free and cash-free basis.

Under the new ownership structure, the Issa brothers and TDR Capital are acquiring a majority ownership stake in Asda. Walmart will retain an equity investment in the business, with an ongoing commercial relationship and a seat on the Board.

The development follows rumors reported in February that Walmart was considering a sale and talking to different interested parties.

A release from Walmart said that at a time of evolution in the UK food retail sector, the new owners will continue to build a strong and successful business, benefiting from fresh capital and expertise, as well as valuable links with the world’s largest retailer.

The Issa brothers, backed by TDR Capital, will support and accelerate Asda’s existing strategy, which is anchored in delivering low prices and convenience to customers.

Asda will remain headquartered in Leeds and will continue to be led by Roger Burnley who will form part of Asda’s Board alongside representatives appointed by the Issa brothers, TDR Capital and Walmart.

As well as accelerating Asda’s existing strategy, the Issa brothers will bring significant additional expertise, particularly in convenience retail and brand partnerships, drawing on their experience of building a global convenience retailer with more than 6,000 sites, Walmart said.

They are well placed to support Asda in developing a compelling convenience retail proposition and taking it to market, and to advise on the development of strategic brand partnerships that will better enable Asda to address multiple consumer missions. 

Judith McKenna, President and Chief Executive Officer of Walmart International, said: “We are delighted to be able to announce this deal today, which we believe creates the right ownership structure for Asda, building on its 71 year-heritage, whilst bringing a new entrepreneurial flair, not only to Asda, but also to UK retailing.

"I’m delighted that Walmart will retain a significant financial stake, a board seat, and will continue as a strategic partner. Asda has been a powerhouse of innovation for the rest of the Walmart world, and we look forward to continuing to learn from them in the future. This important combination will continue to keep customers and colleagues at Asda’s heart, which is important to us all."

Mohsin and Zuber Issa said: “We are very proud to be investing in Asda, an iconic British business that we have admired for many years. Asda’s customer-centric philosophy, focus on operational excellence and commitment to the communities in which it operates are the same values that we have built EG Group on.

"Asda’s performance through the COVID-19 pandemic has demonstrated the fundamental strength and resilience of the business, and we are excited to support Roger and his team as they continue to reposition the business to drive long-term growth."