Asda is to buy the UK and Ireland business of EG Group for £2.27billion - in a deal that will include 350 petrol stations and about 1,000 shops.
Both businesses are already owned by the billionaire brothers Mohsin and Zuber Issa and private equity group TDR Capital.
The companies said the tie-up will create combined revenues of nearly £30billion, with all EG Group sites to be rebranded as Asda.
The resulting empire will consist of almost 170,000 employees, nearly 600 supermarkets and 700 petrol forecourts.
Both firms said the deal "is a natural next step" with everything expected to be signed off and closed toward the end of this year. No job cuts were announced today.
Asda already has 166 "On the Move" convenience stores after taking over former EG sites, following the Issa brothers' takeover of the supermarket chain from Walmart for £6.8billion in 2021.
The supermarket has 438 petrol stations, including 129 forecourts that Asda bought from the Co-op last year in a £600million deal.
Asda chair Stuart Rose said: "Asda's acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen.
"Throughout my career in retail one thing has always been true, that meeting the evolving needs of customers is the route to growth.
"This transaction is all about driving growth by bringing Asda's heritage in value to even more communities and accelerating the growth of its convenience retail business."
Mohsin Issa, co-owner of Asda, said: “Asda is committed to saving customers precious time and money across their shopping baskets and on the forecourt.
“The combination of Asda and EG UK&I will be positive news for motorists, as we will be able to bring Asda’s highly competitive fuel offer to even more customers.
“I would like to sincerely thank all colleagues at both businesses for their ongoing efforts to serve our customers during tough economic times, and I look forward to welcoming our new colleagues from EG UK & I and expanding the Asda family further.”
EG Group said £150million will be invested within the next three years to fully combine the businesses and hopes to make savings of around £100million.
But the GMB union had earlier warned the deal - which was first reported to be in the works in January this year - could create "unsustainable" debt for Asda.
EG Group reportedly has a £7billion debt pile, while Asda is said to owe £4.7billion.
Nadine Houghton, GMB national officer, said: "The billionaire Issa Brothers and the elite multi-millionaire private equity fund managers at TDR capital want to use Asda as a cash cow to pay off their debts.
"This merger is wrong on so many levels - it is wrong for consumers and will increase food prices, it is wrong for drivers with a chilling effect on fuel prices, it is wrong for Asda's workers and it is wrong for Asda's business."
