ASDA has bought the Netto supermarket chain in the UK for £778m.
Netto has 193 stores, which will be converted to small Asda stores by next Summer, if regulators give the deal the go-ahead.
Asda plans to employ up to twice as many staff in each of the stores it has acquired. It sees the move as an expansion into the small supermarkets sector.
Netto’s stores average only 8,000 sq ft – compared with Asda’s 46,000 sq ft average superstore.
For the past three months Asda’s market share has stood at 16.8 per cent – down from a peak of more than 17 per cent. Buying Netto will add only seven per cent but will help it to compete against Tesco Metro and Sainsbury’s local stores.
Asda chief executive Andy Clarke said: “Customers will benefit from low prices on a significantly broader range of quality products, complemented by the wide range of services we offer in all our smaller stores.”
Danish budget supermarket Netto has operated in the UK since 1990. Netto now plans to focus its growth on Scandinavia and Northern Europe.
Asda has been linked with other potential targets, such as Woolworths, Argos and Matalan, but the Netto deal is the first major deal done by Clarke who moved up to the top job earlier this month.
Netto is part of the Dansk Supermarked group and has been in the UK for some 30 years, but the West Yorkshire based retailer missed out on the discounter boom enjoyed by rivals Aldi and Lidl at the height of the recession.
Like other discounters, it keeps prices low by selling fewer than 2,000 products, compared with 20,000-30,000 in a major supermarket.
Asda is the UK’s second biggest grocer, behind Tesco and is part of the Wal-Mart global retail empire. The move for Netto is new chief executive Clarke’s first major decision.