Wal-Mart Stores Inc. said yesterday that it has agreed to buy the United Kingdom's third-largest supermarket chain for $10.8 billion, threatening British retailers with the same steep discounting tactics that have become its hallmark in the United States.

The acquisition of Asda Group PLC could serve as a springboard for additional overseas expansion and would more than double Wal-Mart's international sales.

Bentonville, Ark.-based Wal-Mart, the world's biggest retailer, is seeking to increase its presence in Europe after entering the German market just two years ago with the purchase of the Wertkauf chain.

Asda is the most Wal-Mart-like of all the British chains, and that's no accident. From the friendly greeters at the door to the steady stream of specials announced over the public-address system, Asda has been modeled directly on the huge American retailer.

The British retailer and Wal-Mart are "very much culturally related," said John Menzer, Wal-Mart's executive vice president and chief financial officer. "They're very much following Wal-Mart's lead in price rollbacks," he said.

News that Wal-Mart is headed for Britain is likely to set off a price-cutting war in that country and unleash another round of consolidation in an industry that has become increasingly dominated by international companies, analysts said.

"Nobody wants Wal-Mart to be in there," said Gary Giblen, a retail analyst with Banc of America Securities in New York. "But it's unstoppable. The question is, `Who's next?' "

Wal-Mart's offer trumps a $9.4 billion bid by Britain's Kingfisher PLC, which indicated yesterday that it had no plans to increase its bid.

Asda officials appeared delighted by Wal-Mart's bid. "We have modeled . . . our business on Wal-Mart's success in the U.S.," Chairman Archie Norman said. "We are very excited about the prospect of joining them."

After the announcement, shares of Tesco PLC and J Sainsbury PLC, Britain's largest food retailers, spiraled downward on the London Stock Exchange. Asda's shares were up about 18 percent. Shares of Wal-Mart rose 43 3/4 cents to close at $43.12 1/2 on the New York Stock Exchange.

The Asda deal, which would add another 229 stores with annual revenue of about $13 billion to Wal-Mart's holdings, wasn't entirely unexpected. Rumors have been rampant across Europe since this spring, when Wal-Mart's top international executives met with British Prime Minister Tony Blair. In addition, Kingfisher's bid for Asda was largely viewed as a defensive move to block Wal-Mart's invasion. Britain is certainly ripe for conquest, analysts said. High prices have already prompted British regulators in April to study whether larger grocery chains are using their clout to overcharge consumers.

"Finally, some price competition for our long-suffering shoppers!" said Johnny Waite, host of "You and Yours," a BBC consumer program. "We're going to see some of those rock-bottom American prices right here!"

Said Alex Mitchell, a London retail analyst: "Wal-Mart has become number one through efficiency, technology and management that is sharply focused on cutting prices. A competitor like that could make a big difference in British retailing."

The Asda chain demonstrates a sense of whimsy that appeals to children. The stores feature plastic cows mooing in the dairy aisle, robot hens that cluck when you pick up a pack of free-range brown eggs, and "Wok and Roll" stands selling hot egg rolls in the deli section.

Even if the acquisition is completed, Wal-Mart's European expansion will likely move slowly, analysts said. The retailer has been stymied by the expense and shortage of large parcels of land in Europe, as well as government restrictions. To date, analysts said, the company has not used its own name in Europe, possibly because Wal-Mart is not a recognized name there, pronunciation problems and anti-American sentiment.

"A lot of European countries are like, `Yankee, go home!' " analyst Giblen said. "They might like the low prices, but they don't want to buy at a store called Wal-Mart."

Reid reported from London.

Companies in Profile

WAL-MART STORES ASDA GROUP

Business: World's largest Business: Owns and operates

retailer; operates about about 215 stores in Britain

3,600 discount stores, that sell food, clothes,

Supercenters and Sam's home furnishings and other

Clubs. products.

Based: Bentonville, Ark. Based: Leeds, England

Origins: Sam Walton opened Origins: A group of dairy

a "Walton 5" in 1950; and farmers created a

with his brother, James partnership in 1920 in

Walton, opened the first England to ensure they

Wal-Mart Discount City in would have wholesale and

1962. Wal-Mart went retail outlets; went public

public in 1970 with 18 stores in 1949 as Associated

and sales of $44 million. Dairies and Farm Stores.

Employees: 910,000 Employees: 48,000

1999* sales: $137.63 billion 1999** sales: $13.52 billion

1999* net income: $4.43 billion 1999** net income: $522.8 million

Yesterday's closing stock Yesterday's closing stock

price: $43.12 1/2, up price: $3.50, up 52 cents

43 3/4 cents

Ticker: WMT on the NYSE Ticker: ASSD on the London

Stock Exchange

Web address: www.wal-mart.com Web address: www.asda.co.uk

*For year ended Jan. 31

**For year ended May 1

SOURCES: Hoover's, Bloomberg News