ABOUT 1,000 jobs are to be lost at Boots and Alliance Unichem after the two companies announced a merger.

The new company - to be called Alliance Boots - will become the largest drugs retailer and wholesaler in the UK, as well as having a network across ten other European countries.

The two companies are taking on the might of the supermarkets by creating a business with 2,600 stores in the UK and £13bn in sales.

But it has emerged that Alliance Boots expects to cut 1,000 jobs from the combined businesses.

Chairman Sir Nigel Rudd said: "The combined group will have around 100,000 employees.

"We think that emanating from this transaction, there are about 1,000 people who will be leaving the group over a period of time. That is not a very high percentage."

Executives said the "merger of equals" would provide a platform for the Boots brand to expand abroad and generate at least £100m of savings within four years, partly through the job losses.

Effectively doubling in size to be worth about £7bn, the business will have more purchasing power to secure better terms from suppliers and lower prices to compete with supermarkets, which have been eroding sales atBoots.

Boots has an estate of more than 1,400 stores in the UK in mainly high street locations, while Alliance UniChem has 939 outlets close to doctor's surgeries and hospitals.

Shopworkers' union Usdaw said it was too early for "unhelpful speculation" about jobs.

However, Usdaw said it was seeking urgent talks with managers of both companies about the implications of the deal.

Richard Baker, chief executive of Boots, was confident the deal would clear all competition hurdles as the retailer has only 12 per cent of the UK market for selling medicines.

But many in the City are betting on a rival bidder emerging - either Superdrug owner AS Watson, or a private equity group.