Sainsbury’s, the UK’s second largest supermarket, has reached a deal to take over Asda, the UK’s third-largest supermarket. The new entity will become the largest retailer in the UK with a combined 31% share of the £185bn (€210bn) UK grocery market.

On Monday, Sainsbury’s announced it had agreed the terms of the deal with Walmart, the US supermarket giant that owns Asda. Walmart will receive £3bn (€3.4bn) in cash from Sainsbury’s and take a 42% stake in the new entity. The deal values Asda at £7.3bn (€8.3bn).

Shares

Shares in Sainsbury’s soared 15% since the deal was announced but significant regulatory hurdles will remain before this takeover gets the go-ahead.

It’s likely Sainsbury’s will have to hive off as many as 70 Asda stores to ease competition regulator concerns.

Bord Bia has said it will conduct a comprehensive risk assessment on what impact this deal will have on the Irish food industry. Between them, Asda and Sainsbury’s source up to €700m of food and drink from the island of Ireland every year.

Sainsbury’s is a major buyer of meat from Dunbia, while Larry Goodman’s ABP is the main supplier of red meat to Asda.