"Sainsbury's and Walmart Inc. are pleased to announce that they have agreed terms in relation to a proposed combination of Sainsbury's and Asda Group Limited, a wholly owned subsidiary of Walmart, to create an enlarged business", they said in a statement after confirming advanced talks over the weekend.
It will aim to generate £500 million in cost savings but Sainsbury's insisted there are no planned store closures as part of the merger, with both brands to operate side by side.
After spending nearly 20 years with U.K.'s Asda, an original purchase that was for $11.4 billion and included net debt, Walmart is bidding the chain across the pond a fond farewell for £7.3 billion, or $10.1 billion United States dollars. Sainsbury's equity was valued at 6 billion pounds at Friday's close.
"As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy".
A merged entity would have a market share of 31 per cent.
Coupe, who grew up in West Sussex and enjoys playing the guitar and cycling, was a graduate trainee at consumer goods giant Unilever who then moved to Tesco's marketing department before joining Asda in 1993.
Although Britain's Competition and Markets Authority (CMA) said it was likely to review the deal, Sainsbury's shares jumped as much as 21 percent, hitting their highest since July 2014, and closed up 14.5 percent.
From left, Mike Coupe, chief executive of J Sainsbury, Judith McKenna, president and chief executive of Walmart International and Roger Burnley, president and chief executive of Asda.
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"This creates a great deal for customers, colleagues, suppliers and shareholders and I am excited about the opportunities ahead and what we can achieve together". Sainsbury is picking up Asda to create a market-leading alliance, according to Wall Street Journal.
There is a reasonable possibility that the group will be forced to sell off some stores to satisfy competition requirements.
Ms Bailey warned that, in the absence of proper vetting, it would be "British shoppers that suffer from rising prices and British workers that may be fearing for their jobs".
The combination, subject to regulatory approvals, would give Walmart 42% of the share capital of the integrated business, made up of 29.9% of Sainsbury's ordinary shares, with full voting rights attached.
Conversely, shares in Tesco fell as much as 4% and Morrisons stock was down 3% before edging back through the day.
Sainsbury's also reported its full-year results, showing a first rise in profit in four years and expressed confidence in meeting analysts' profit forecasts for 2018-19.
The transaction values Asda at £7.3 billion.
However, investments in price dragged down operating profit to £720 million from £845 million.