Saga, which sells holidays and other products to the over-50s, is to buy motoring giant AA for £3.4 billion.
The merged company will have more than 11,000 employees.
Private equity firms Permira and CVC bought the AA in 2004. But the deal proved controversial after the firm cut 3,000 jobs - equivalent to a quarter of the workforce.
Saga is also owned by a private equity firm, having been bought by Charterhouse in 2005.
Following the deal, Permira and CVC will own 42.5% of the business, while Charterhouse will hold 37.5% and the management and staff of both businesses the remaining 20%.
Saga was founded in 1951 as a single hotel in Folkestone, but now has a database of 7.6 million customers and more than 2,500 staff.
Saga chief executive Andrew Goodsell will run the combined business following the deal, while AA chief executive Tim Parker is to leave the company.
Mr Goodsell says the deal will enable each business to retain its own identity while allowing them to cross-sell products to each other's customer base: "These are two great brands, in different and complementary business areas but they have many features in common".
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