Asda, the British arm of U.S. retailer Wal-Mart
Asda, Britain's second-biggest supermarket group behind Tesco
Leiths, set up in 1975, by restaurateur Prue Leith and business partner Caroline Waldegrave, will create and develop Asda's Extra Special premium own-brand range of groceries and wines.
Premium foods are becoming a key battleground among retailers as cash-strapped Britons cut back on restaurant meals and look to treat themselves more cheaply at home.
They also offer a way for supermarkets to boost profit margins at a time of intense price competition on staple products like milk and eggs.
Asda announced a drive to improve the quality of its foods last year in a bid to improve sales growth lagging main rivals.
The chain said the deal with Leiths was part of its goal, announced in April 2010, to overtake J Sainsbury
While Asda already has larger annual revenues than Sainsbury, that is because it sells more general merchandise products like clothing and electrical goods.
(Reporting by Mark Potter; Editing by Dan Lalor)