Tesco is buying Johns grocery for $3.6bn, making it the largest grocery company in the US.
The transaction is the latest move in a long-running US battle between grocery giants.
The deal comes amid growing competition in the supermarket sector as consumers increasingly turn to online shopping.
Tesco’s grocery business is worth about $2.5tn.
The US-based supermarket has been in the news recently after its board approved a $4.9bn takeover of rival Sam’s Club.
The acquisition of Johns is expected to close in the coming months.
Johns owns grocery stores in Ohio, Maryland, Pennsylvania and Virginia.
It also operates stores in California, Arizona, Nevada, Utah and Texas.
Mr Tesco has previously said he is “not going to be interested” in Johns after the supermarket company announced plans to close more than a dozen stores in the state.
The grocer said the deal will create jobs and expand its footprint.
It said the company’s current stores will be replaced with more than 1,000 new, modern, high-quality grocery stores.
The company said it would keep its existing retail workforce of more than 15,000 and also hire new staff to fill those positions.
It is also investing more than $600m in a $1.6 billion new data centre in Arizona.
John’s shares fell by more than 20 per cent in early trading on Tuesday.
Tesinco bought the US grocery giant in January for $7.2bn.