Punter Southall Group is to merge its actuarial, investment consulting and administration businesses with Xafinity to create a new specialist pensions consultancy firm.
Punter Southall said the new firm would have the scale and capabilities to offer a "genuine pensions-focused alternative to the global consultancies in the industry". Both firms operate in the occupational pension space.
Under the proposed deal, Punter Southall, Punter Southall Investment Consulting and Punter Southall Administration are being acquired by Xafinity for a combination of cash and shares.
As a result, Punter Southall Group will become the largest single shareholder in Xafinity.
Punter Southall said the merger will create a business of significant scale, enabling clients of the complementary Xafinity and Punter Southall businesses to benefit from a wider range of services and expertise.
Punter Southall Group will continue to own, operate and invest in its range of specialist businesses across wealth management, workplace saving, and health and protection.
The proposed deal will also see Xafinity's independent trustee business, HR Trustees, merge with PS Independent Trustees and become part of the Punter Southall Group, significantly expanding its capabilities in this area.
Punter Southall chief executive and co-founder Jonathan Punter said: "This is an exciting development for the clients and employees of our actuarial, administration and pension businesses. They will benefit from increased scale and expertise through the creation of the largest purely ‘pensions' consulting firm in the UK market.
"As the largest shareholder we will continue to have a strong connection to this business. At the same time, by combining HR Trustees with our existing independent pension trusteeship business, we have expanded our offer significantly in this area. For the rest of the Punter Southall Group, the merger provides the resources to invest and drive future growth."
Xafinity co-chief executive Paul Cuff added: "We have a very clear strategy to build market share in the pensions advisory space, and the merger of these three divisions from PS Group with Xafinity will enable us to achieve our aim of becoming the clear alternative to the 'Big Three' in the pensions consultancy sector.
"The trading environment for Xafinity remains strong, while the pipeline of new business continues to offer real growth opportunities, and we look forward to the rest of the year with confidence."
The proposed merger will be subject to regulatory and shareholder approval and will aim to complete in 2018.
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