ASDA, a subsidiary of Walmart, has acquired the discount retailer Netto, which has 193 shops in the U.K., for £778 million ($1 billion), strengthening its position as the country's second-biggest food retailer and establishing a footprint in a small store format.

ASDA intends to boost its smaller-format store portfolio and said the Netto outlets will be added to a new division set up for supermarkets smaller than 25,000 square feet. It hopes to complete the takeover later this summer, subject to regulatory approval, and rebrand the Netto stores by next summer. ASDA also intends to expand its non-food ASDA Living chain.

Netto was owned by Danish shipping giant Maersk, and employs 3,500 staff in the U.K. It's the first significant move by Andy Clarke, ASDA's chief executive, who started this month.

"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," says Clarke.