Asda has bought the Netto business in the UK for £778m.

The Netto business comprises 193 stores, which will be converted to small Asda stores by next Summer, subject to approval from the Office of Fair Trading. Typically the Netto stores are around 8,000 sq ft in size, and the number of SKUs will be increased from 1,800 to 10,000.

The deal at a stroke gives Asda real presence in the small supermarkets sector. Asda plans to employ up to twice as many staff in each of the stores it has acquired.

“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,” said Asda chief executive Andy Clarke.

Until regulatory approval is achieved, the stores will trade under their existing brand and existing management.

Danish discounter Netto has operated in the UK since 1990, but the no-frills grocer has failed to make the impact in the UK that rivals Aldi and Lidl have. It now plans to focus its growth on Scandinavia and Northern Europe.