The deal, valued at £12 billion (€13.7 billion), is likely to be structured as an Asda takeover of EG UK, according to a report in the Retail Gazette.
The move will add more debt to the balance sheet of the supermarket, whose net debt currently stands at £4.7 billion (€5.4 billion).
The report also noted that EG Group needs to refinance £7 billion (€7.97 billion) of debt by 2025, and the owners hope that combining the businesses will enable them to refinance at a better rate.
On completion, it will create a group with 581 supermarkets, 700 petrol forecourts, and more than 100 convenience stores, and the former chief executive of Marks & Spencer, Lord Rose, is likely to lead the combined group.
Talks on the merger began in January of this year, and the plan is now in the implementation stage.
The transaction is being advised by bankers from Rothschild, Barclays and J. P. Morgan, the report stated.
Elsewhere, Britain’s competition regulator found that supermarket group Asda’s £611 million (€691 million) purchase of the Co-op’s 132 petrol stations and attached stores could lead to higher prices or fewer choices in some parts of the country.
According to Colin Raftery, the Competition and Markets Authority’s senior director of mergers, “There’s a risk that customers could face higher prices or worse services in a small number of areas where Asda would face insufficient competition in either groceries or fuel.”