The Netherlands’ major grocer Ahold has agreed to buy Belgian rival Delhaize in a 25 billion-euro ($28 billion) deal that will create Europe’s biggest listed food retailer by market capitalisation and one of the biggest food retailers in the United States, according to Reuters.

Ahold operates the Netherlands’ major grocery chain Albert Heijn, while Delhaize is Belgium’s biggest supermarket chain.
Reuters said that the two groups generated two-thirds of their sales from the US grocery market and would have a combined 5% total market share.

The combination will bring four well-known supermarket chains on the US east coast under the same umbrella: Ahold’s Stop & Shop and Giant stores and Delhaize’s Food Lion and Hannaford markets.
Together, the companies said they will lower operating and purchasing costs to compete with Wal Mart and expand the reach of Ahold’s online grocery store Peapod, the largest such service in the US, to compete with Amazon.

Ahold will take a 61% stake in the new company, which will have 54.1 billion euros ($61 billion) in annual sales from 6,500 stores worldwide, including more than 2,000 in the United States and the rest in the Netherlands, Belgium and Eastern Europe.

The deal is expected to give Ahold and Delhaize much-needed buying power in the fiercely competitive US grocery market after a recent wave of consolidation, as well as help them face the threat posed by booming discounters such as Lidl in Europe. Delhaize was pushing ahead with the merger in August, according to reports.