by Stephen Garner

Wal-MartAmerican mega-retailer Walmart is exiting the UK in a new deal with competitor J Sainsbury plc. Under the deal, Walmart’s UK retail subsidiary Asda will be merged with Sainsbury’s, creating one of the UK’s leading grocery, general merchandise, and clothing retail groups.

Under the terms of the combination, Walmart will receive £2.97 billion ($4.1 billion) in cash and a 42 percent stake in the combined business. The deal values Asda at £7.3 billion ($10 billion), and creates a mega retailer with 2,800 stores and combined annual sales of roughly £51 billion ($70 billion).

As a strategic long-term partner, Walmart will share its global retail network and knowledge. The combined business will have enhanced capabilities and a strengthened balance sheet to help deliver value and opportunities for customers, colleagues, suppliers and shareholders of both businesses.

The new business will operate a distinctive dual brand strategy. Asda would continue to be run from Leeds by its own CEO, Roger Burnley, who would join the group operating board of the combined business, ensuring Asda retains its heritage and roots.

“We believe the Combination offers a unique and exciting opportunity that benefits customers and colleagues,” said Doug McMillon, Walmart’s president and chief executive officer. “As a company, we’ve benefited from doing business in the UK for many years, and we look forward to working closely with Sainsbury’s to deliver the benefits of the combination.”