ASDA nets 193 Netto stores in £778m deal

ASDA yesterday cemented its position as the country’s second-biggest supermarket by buying the UK stores of discount chain Netto in a deal worth £778 million.

ASDA s new boss Andy Clarke will use the Netto stores to take on Tesco ASDA's new boss Andy Clarke will use the Netto stores to take on Tesco

The grocer, which last week revealed its first fall in same-store quarterly sales in four years, said the 193 stores, mainly in the North and averaging 8,000 sq ft, would be Asda-branded by summer 2011.

The move, subject to a green light from competition watchdog the Office of Fair Trading, is the first big step by new chief executive Andy Clarke. He described the deal as a “significant step forward”.

An Asda spokesman said: “This is part of our five-year plan to make us the clear number two in the market.” The new stores, which will sell a “broad range” of products including non-food, will also challenge market leader Tesco’s convenience stores. “Customers will be able to do a full weekly shop at our new stores,” said the spokesman.

“They will be able to buy food, socks and knickers and even irons and toasters.” As a result, Asda would employ “twice as many staff” as a typical Netto store in the same location. But it could not say how many jobs would be created.

Analysts Collins Stewart said: “This takes Asda into neighbourhoods where its name is known and its out-of-town stores don’t reach.” Shore Capital’s Clive Black said: “This will inject some life and momentum into a business that clearly has underperformed recently.But it won’t cause shockwaves given Netto’s 1 per cent market share.”

The OFT would likely require Asda to sell a “number of sites” to rivals.

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