Wal-Mart, the US retail giant, entered the UK market yesterday with a £6.7 billion sterling (€10.4 billion) offer for Asda, the UK's third-largest supermarket company.

The all-cash offer tops a £5.8 billion all-paper bid from Kingfisher, the UK general retailer, and could herald a shake-up in British retailing.

Kingfisher said it would not raise or withdraw its offer. But analysts believe that, with other retailers, it may be forced to seek mergers with European counterparts to compete with a WalMart/Asda grouping.

News of the Wal-Mart deal coincided with the surprise resignation of Mr Bobby Martin (50), who had spent more than six years as head of Wal-Mart's international division.

Analysts speculated that Mr Martin's departure, which took immediate effect, indicated he had disagreed with other board members over the Asda bid.

Mr Martin had earlier said WalMart's international expansion would be focused on existing markets.

Last year, the US retailer derived around 9 per cent of its $138 billion sales from its overseas operations.

It entered Europe in 1997 with the $880 million acquisition of Wertkauf of Germany, which was followed by last year's $660 million purchase of Spar Handels, giving it a total 95 units in Germany.

Wal-Mart yesterday insisted that Asda would retain its name and brand.

Mr Jay Fitzsimmons, senior vice-president, said the move was prompted by the Kingfisher deal which forced Wal-Mart to review its strategy and timing for entering the UK.

Analysts in the UK welcomed Wal-Mart's entry as offering better value for shareholders, but warned that it could cause some pain for other retailers in the short term as margins on fast-growing general merchandise were forced down.

UK supermarkets are currently under investigation on lack of competition in grocery retailing, and mergers in the food retailing sector are unlikely until the findings of this inquiry are published next year.

Wal-Mart is offering 220p in cash, and is being advised by Wasserstein Perella and Dresdner Kleinwort Benson. Asda shares rose 33 1/2p to close at 218p.