THE UK's biggest holiday park operator is to be created in a £960 million merger deal.

Newcastle-based Parkdean and Park Resorts, which has its headquarters in London, are joining forces to form a combined business with 73 sites serving 1.8 million customers.

The firms said the merger would tie up Parkdean's strength in the South West and Scotland with Park Resorts, whose sites are mainly on the East Coast and in the North West including the Lake District, to create a UK-wide business.

Parkdean has 24 family holiday parks in woodland, coastal and countryside locations from Newquay in Cornwall to Nairn in the Highlands.

Park Resorts has 49 sites including at Camber Sands in East Sussex and by Windermere in the Lake District.

The annual turnover of the two groups combined is £370 million, with underlying earnings of around £92 million.

Park Resorts is majority-controlled by private equity group Electra, which first invested in the company in 2012, and whose other investments have included Sheilas' Wheels insurer esure.

The deal will see a new refinancing for the business which will take Electra's cash proceeds from the company to £106 million, 81 per cent of its original investment cost.

Parkdean is majority-owned by another private equity firm, Alchemy. Both Alchemy and Electra will retain stakes in the new business.

The deal is subject to approval by regulators.

Park Resorts chairman Alan Parker said: "The Park Resorts Group and Parkdean Holidays are an outstanding strategic fit."

The deal comes after Britain's five Center Parcs resorts were bought by Canadian investment firm Brookfield in a deal thought to be worth more than £2.4 billion announced earlier this year.

Gosforth-based Parkdean started life with one caravan park in 1999 and was bought out by private equity firm 3i, which floated the business on the London stock market (AIM) in 2002 with a value of £32m. Parkdean was taken private again by Alchemy in 2006 in a £135m deal.