Issa Brother’s EG Group Acquire Leon Food Chain for £100 million

The M and A Centre
5 min readApr 25, 2021


Source: Spitafields Market

Deal Overview

  • Announcement date: 16/04/2021
  • Industry: Restaurants
  • Deal Value: £100m
  • Deal Consideration: A deal made behind closed doors; said to be valued between £80 — £100 million
  • Acquirer Advisor: Allen & Overy
  • Target Advisor: Rothschild & Co

Company Details: EG Group Ltd

  • Founded: 15/10/2015
  • HQ: Blackburn, England
  • Market Cap: IPO estimated value of £10bn
  • Funding: 2019 Total Equity £646m
  • LTM EBITDA: £860m
  • D/E: 14.44X

EG Group limited is a UK based fast food and petrol station operator, with 6,000 sites distributed across ten countries worldwide. The company was originally founded in 2001 by billionaire brothers Mohsin Issa and Zuber-Vali Issa under the name ‘Euro Garages’; however in 2015, private equity firm TDR Capital acquired a 50% stake in the company for $1.3bn, leading to the rebranding of ‘EG Group’. Currently the Issa Family hold a 50% stake in the company, whilst TDR Capital hold the other 50%. EG Group have 44,000 employees working across their 6,000 sites, and at present they are the UK’s second largest private company with 2020 sales reaching £17.604bn.

Company Details: Leon Restaurants

  • Founded: 19/01/2004
  • HQ: London, England
  • Funding: 2019 Closing Shareholders’ Funds £13.1m
  • LTM EBITDA: 5.2m
  • D/E: 0.19X

Leon Restaurants is a UK based restaurant chain, founded in 2004 by John Vincent, Henry Dimbleby and Allegra McEvedy. They currently operate 60 restaurants in 6 different countries and differentiate themselves from competition through selling healthy, affordable and sustainable fast food. Alongside their main restaurant business, they also have multiple other revenue streams, these range from: several published cookbooks, own-brand groceries and their cook and tableware line in partnership with retailer John Lewis.

A more extensive look into EG Group’s history

The creation of ‘Euro Garages’ began when the Issa brothers acquired their first petrol station in Greater Manchester in 2001; from then until 2017 they continued to grow their business through acquisitions and petrol sales. In November of 2017, they then attained 1,000 forecourt assets from Esso in Germany and went on to acquire a further 1,200 Italian sites from Esso in February of the following year.

Entering 2020, EG Group became the largest KFC franchisee, operating 145 outlets in the UK and Ireland, laying the foundations for business in the restaurant sector. Currently they manage 700 food outlets in the UK and Ireland, including KFC branches and drive thrus, as well as Greggs and Starbucks — a strong non-fuel and food service operation.

EG Group made headlines in October of 2020 when it acquired ASDA’s forecourts for £750m from the US owners Walmart. This acquisition put EG Group in an extremely powerful position, making their services virtually impossible to avoid when travelling the UK’s motorway network.

Credit: Lancashire Telegraph

So why Leon Restaurants?

Firstly, Leon Restaurants has many attractive features. It is a forward-thinking company, that holds ethical values and runs a clean and sustainable service. It also has an exemplary financial history, with revenues increasing year-on-year prior to COVID-19. It’s debt-to-equity ratio of 0.19X shows that Leon is using very little leverage and is a low risk investment for potential shareholders. The fact that they are also a private institution would also appeal to EG Group’s Shareholder TDR Capital, a private equity firm.

Strategic Rationale

So what is the strategic rationale behind the EG Group — Leon Acquisition?

What makes them a specifically favourable company for EG Group is their capability to be integrated into the EG business model. The Leon own-brand groceries can be sold within the ASDA stores and garages as well as the Leon merchandise. As for the Leon outlets, they can operate in a similar way to the EG Groups franchises, strengthening EG Group’s position in the restaurant sector and allowing post-acquisition operations to proceed seamlessly.

Finally, in a statement, EG Group announced that they have plans to open roughly 20 new Leon outlets a year from 2022 and that they are eager to build on the existing network by exploring opportunities across its own estate. With the knowledge that 29 Leon franchises are based in airports and railways, I would expect the introduction of Leon restaurants in services stations — where the bulk of EG’s business is based — is almost certainly on the cards.

EG Group’s prospects

As of the 18th of April, EG Group have been in acquisition discussions with British coffee house Caffè Nero, less than a week after the Leon Restaurant acquisition. The Issa brothers have reportedly bought £140m of Caffè Nero debt. The company runs 1,017 coffee houses in eleven countries, making them another appealing venture for the Issa brothers and TDR Capital.

The swift and boisterous behaviour of EG Group over the past year makes their intent very apparent, they’re keen to progress with their development. As two brothers that have come from nothing, they clearly haven’t lost their hunger for growth on their journey to riches.

What risks do EG Group face?

Although, their activities are heavily funded by debt — with net debt reaching £7.3bn by the end of 2019 — the Issa brothers clearly have an explicit plan for where they want to be and are more than content with high-risk, leveraged business. Leon on the other hand has very little leverage, quashing the idea that the acquisition will harm EG Group from a leverage perspective.

Nonetheless, Leon was hit heavily by the pandemic. Following the trend of the entire restaurant sector, their main source of revenue was hit substantially and sales dropped to all-time lows. Unfortunately, the 2020 10-K can still not be publicly accessed so we are unable to see the actual figures, however this situation does pose risks to EG.

I have no doubt Leon will be in a weak financial position, therefore EG will need to flood a considerable amount of capital into the business to help it bounce back once the economy stabilises.

As well as this, we are unsure if restaurants will be as prominent as before COVID-19; with public restrictions looking like they’re here to stay, will the attraction of eating out endure or have the Issa brothers bitten off more than they can chew?

When will the deal go through?

The closing of the transaction on the 16th of April completed the acquisition, marking Leon Restaurants as yet another asset of the rapidly growing EG Group.

By Harris Peters, Swansea University



The M and A Centre

A student led blog, providing informative and insightful analysis into recent mergers and acquisitions, as well as broader investment banking related content.