SAINBURY'S said there are no planned store closures as part of the deal, with both brands to operate side by side.

The combined supermarket expects to lower prices by around 10% on products customers buy regularly.

It will see Asda owner Walmart hold 42% of the new business and receive £2.97 billion in cash, valuing Asda at £7.3 billion.

Sainsbury's is valued at around £5.9 billion.

The new supermarket group will have combined revenues of £51 billion and will aim to generate £500 million in cost savings.

David Tyler, Sainsbury's chairman, said: "We believe that the combination of Sainsbury's and Asda will create substantial value for our shareholders and will be excellent news for our customers and our colleagues.

"As one of the largest employers in the country, the combined business will become an even greater contributor to the British economy.

"The proposal will bring together two of the most experienced and talented management teams in retail at a time when the industry is undergoing rapid change."

Asda boss Roger Burnley said: "The combination of Asda and Sainsbury's into a single retailing group will be great news for Asda customers, allowing us to deliver even lower prices in store and even greater choice.

"Asda will continue to be Asda, but by coming together with Sainsbury's, supported by Walmart, we can further accelerate our existing strategy and make our offer even more compelling and competitive."

Shares in Sainsbury's rocketed 20% to 325p at the market open.

Shares in Tesco fell 4% and Morrisons stock was down 3%.

Mr Coupe said on a media call that the duo have asked the Competition and Markets Authority (CMA) to fast-track the deal to a phase two in depth probe, adding that the combination is expected to complete in the second half of next year.

"We believe the outcome of the CMA will be to keep all of the stores trading."

The tie-up is "designed for a new era" of retailing, Mr Coupe added, before pointing out that Asda has a strong presence in the north of England and Sainsbury's in the south.

"The deal brings scale in clothing and general merchandise," confirming that Argos stores will be put inside Asda supermarkets.

He also confirmed that the deal has the blessing of the Qatar Investment Authority, Sainsbury's largest shareholder.

The CMA said that the merger is "likely to be subject to review".

The competition watchdog said it will assess whether the deal could reduce competition and choice for shoppers.

"If a potential reduction in competition is identified, it would be referred for an in-depth, Phase 2 investigation lasting up to 24 weeks - unless the merging parties offered immediate proposals to address any competition concerns identified," the CMA said.