US-owned supermarket Asda bought the UK stores of Danish supermarket chain Netto for £778m had taken the market by surprise on Thursday.

Adding the chain of 193 stores is the major move of Asda to grow its estate of small supermarkets, is still waiting for regulatory approval. This will end the gap with market leader Tesco.

This deal of Netto’s 193 stores in UK will tend to change the shape of the grocery sector by increasing Asda's number of smaller stores

After 1999 acquisition of Asda for £6.7bn, this is the Walmart’s first major business deal in Europe

Andy Bond, resigning from the chair of part-time chairman of Asda this month, said, "Clearly this is a big endorsement of what we have done over the past few years and where we have been going."

All the Netto stores will be converted into Asda stores and branding by 2011 summer. Netto was launched in UK in 1990.

8,000 sq ft Netto stores will be restructured into Asda’s new smaller supermarkets, with an average size of supermarket to be around 42,000 sq ft.

Asda having 374 stores is to open 250 stores in successive period of five years in a move to overtake its rival, Tesco in non food and cement.

Netto has failed to compete with rivals Aldi and Lidl in the UK and is having only 0.7 percent of market share.