Saga and the motoring organisation AA are to merge in a move which will create a company worth £6 billion.

Saga will have control of the combined business although both firms, which were bought by private equity in 2004, will continue to trade separately.

The combination of the businesses, which is subject to approval from regulators, creates a company with more than 11,000 employees. The AA in Ireland currently has more than 550,000 customers and employs around 340 people.

Saga is aiming to target the AA's members with its products while offering AA services to its own 2.5 million customers.

The new holding company, which has yet to be named, will be based in Folkestone at Saga's headquarters.

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%.