Boots and Alliance UniChem are expected to announce a £7bn merger later today in an effort to fight back against the supermarkets.

The groups are expected to announce the creation of the UK’s largest pharmacy chain called Alliance Boots.

As part of the deal, Alliance’s 940 pharmacies in the UK and 310 stores in Europe will be rebranded as Boots.

Boots said that the enlarged company would allow it to compete more effectively with supermarket groups such as Tesco and Asda which have been expanding into the sector by opening their own in-store pharmacies.

Former Asda executive and Boots CEO Richard Baker is expected to become chief executive of the new group.

However, reports are suggesting that jobs cuts will occur as a result of the merger. Between them the companies employ 70,000 staff and reports suggest that Boots could move its head office from Nottingham to London.

The deal is also expected to be referred to the Competition Commission because the new group would control 17% of the UK’s pharmacies and 40% of the UK’s drug supply market.

Private equity groups could also consider launching rival bids for Boots or Alliance Unichem. Boots is already in the process of selling its Healthcare International business.