EG Group, the UK petrol stations company whose billionaire owners are buying Asda, is bringing in retail veteran Stuart Rose to improve governance after its auditors resigned over the matter last year.
Lord Rose, who is due to step down as chair of online grocer Ocado in May, will become non-executive chair of EG immediately, the company said in a statement.
EG’s owners, brothers Zuber and Mohsin Issa and private equity group TDR Capital, have asked Lord Rose to develop “appropriate governance structures for a business of this scale”, he said.
EG has expanded rapidly in recent years, financed by heavy borrowing in high-yield debt markets, and now operates more than 6,000 convenience stores and petrol stations.
Deloitte resigned as its auditor in October because of concerns over governance and internal controls. EG, which reported more than €20bn in sales in the year to December 2019, had no external board members. Delays in appointing any were among Deloitte’s concerns, a person familiar with the matter said at the time.
Lord Rose told the Financial Times that meeting the Issa brothers was “one of my most important bits of due diligence” before agreeing to the role.
“I believe they’re sincere in what they want to do. I believe they do recognise there’s a need for them to improve their governance and get better controls and processes in place,” he said.
He compared the role to his time at Ocado. “When I went to Ocado it was unproven [and] governance wasn’t top of the agenda,” he said. “You move along a path — you make sure entrepreneurialism is maintained, and put appropriate governance around it. I think it’s a similar story at EG.”
Chairing EG was “going to be fun”, he added. “I believe they’re good people, it’s a good business.”
EG appointed John Carey, a former BP executive, as an independent non-executive director in November.
“The recruitment of Stuart Rose is a clear signal of our ambition for EG Group and our commitment to continuous improvement,” said Gary Lindsay, a partner at TDR.
EG’s rapid expansion has turned the Issa brothers, from Blackburn in Lancashire, into billionaires. Alongside TDR they agreed in October to buy a majority stake in Asda, the UK’s third-largest supermarket chain, in a £6.8bn deal that is due to complete in the first half of 2021.
“We have plans to create significant convenience and food service opportunities for our customers, and Stuart’s retail and consumer experience will provide invaluable insight and support,” the brothers said in a statement.
Lord Rose was previously executive chairman of Marks and Spencer and chief executive of Arcadia before its sale to Philip Green. He will be replaced by Rick Haythornthwaite at Ocado.