Supermarket deal: Asda told to sell 47 Netto shops in takeover

ASDA will have to sell a quarter of Netto's stores in Britain to gain clearance for its £778m acquisition of the budget chain.

The Office of Fair Trading said the Leeds-based grocer must sell off 47 stores to address competition concerns, at the high end of both Asda's and the market's expectations.

Asda said the deal would create 1,000 new jobs in stores around the country. All the remaining 147 Netto stores will be converted to Asda supermarkets by this time next year.

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No job losses are planned among Netto's 3,500 employees. The 300 staff who currently work at Netto's South Elmsall depot in West Yorkshire will be offered jobs at Asda – either at South Elmsall or in Asda sites nearby.

Asda, Britain's second-biggest grocer behind Tesco, said it is

confident of finding buyers for the stores.

The OFT ruling was at the high end of expectations but reflects the fact that both Asda and Netto are strong in the North and the Midlands.

The OFT said a quarter of the stores overlapped in some areas and would need to be sold.

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OFT senior director of mergers Amelia Fletcher said: "Although Asda and Netto offer somewhat different propositions for customers, the evidence from our investigation indicated that Asda did provide a significant competitive constraint on Netto in a number of local areas where they overlapped."

Asda plans to close another Netto depot in Daventry but will take on the majority of staff at its own distribution centres nearby.

The retailer, which is owned by US retail giant Wal-Mart, agreed a deal in May to buy 194 Netto stores.

As a consequence of the OFT's intervention, Asda now plans to open its first converted store in the first quarter of 2011, rather than before Christmas.

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Asda, which currently owns 374 stores, is keen to boost its smaller format store portfolio.

The Netto outlets will be added to a new division set up for Asda supermarkets which are smaller than 25,000 sq ft.

Netto, owned by Danish group Dansk Supermarked, has an average store size of 8,000 sq ft.

The OFT said Asda must find suitable up-front buyers for a number of the stores it sells, before the merger can be completed.

It has not disclosed the locations of the 47 stores which must be sold by Asda.