SHARES in J Sainsbury soared nearly 15 per cent after the grocer unveiled details of its proposed £7.3 billion takeover of Asda, with the supermarket giant insisting it has no plans to close any stores as part of the deal.

Investors signalled their approval of the shock merger after bosses outlined the terms of the deal, which will create the UK’s biggest supermarket company, knocking Tesco off the top spot. The combined group would have a combined market share of 31.4%, based on figures from Kantar for the 12 weeks ended March 25, compared with Tesco’s 27.6%. Shares in Tesco fell by nearly 1% while Morrisons were off 1.2%.

While shareholders welcomed the merger trade union the GMB fear it could lead to job losses, raising questions about the future of the companies’ stores and distribution centres in Scotland.

The move, which eclipses Morrison’s £3bn acquisition of Safeway in 2004, underlines the challenges the ‘big four’ grocers have faced amid growing cost pressures, and the dramatic rise of discounters Aldi and Lidl. The sector is also facing the threat of increasing competition from online players such as Amazon, which made a major move into the market by acquiring Whole Foods.

Against that backdrop there has been a wave of consolidation across the sector, with Tesco completing a £4bn deal to acquire wholesale giant Booker and the Co-operative Group mounting a £143 million takeover for Nisa, the convenience store group. Sainsbury’s had earlier acquired Agros owner Home Retail Group in 2016.

Details of the cash and shares deal unveiled yesterday would see Asda owner Walmart receive nearly £3bn and a 42% of the shareholding in the combined group. However the American company, which has owned Asda since 1999, will hold no more than 29% of the voting rights when the transaction is completed.

The merger will create a group with combined sales of around £51 billion, based on 2017 figures, and a network of more than 2,800 Sainsbury’s, Asda and Argos stores. It is expected that the deal will create synergies of at least £500m, largely from buying benefits, opening Argos in Asda stores and operational efficiencies.

Both the Sainsbury’s and Asda brands would be retained, and Sainsbury’s said there are no plans to close any stores, stating that there will be more opportunities for the combined workforce of more than 330,000 “at all levels”.

It also stated that the union would lead to price cuts in the region of 10% for shoppers on products they buy regularly.

However, trade union the GMB has called for talks with Asda after claiming that 1,000 jobs were under threat because of the deal. It is seeking clarity on the future of Asda’s stores in Scotland and its distribution centres in Falkirk and Grangemouth.

Laith Kahalf, analyst at Hargreaves Lansdown, said there are “clear benefits” to the merger but stressed the assessment of the Competition and Markets Authority will be “critical to the viability of this deal”. He said: “The recent approval of Tesco’s takeover of Booker group may give some cause for confidence, though that deal was a vertical rather than a horizontal integration, with neither company competing directly in their key markets. That’s not the case for Sainsbury’s and Asda, though the fact that they have complementary regional footprints will mitigate in their favour.”

Sainsbury’s chief executive Mike Coupe will lead the combined business.

Separately, Sainsbury’s reported a 1.4% increase in underlying profit before tax to £589m for the 52 weeks to March 10.

Shares in Sainsbury's closed up 39.2p at 309p.