TWO of Britain's biggest coach holiday companies are expected to complete a merger next month.

Coach holiday companies Wallace Arnold and Shearings confirmed they were in talks and expected to make an announcement within weeks.

The deal will see Bridgepoint Capital, the major shareholder in Shearings, of Wigan, sell to private equity group 3mi, the main shareholder in Wallace Arnold, of Leeds. Reports of a merger come six months after Shearings cancelled plans for a £50m stock market flotation.

Wallace Arnold owns Newcastle-based National Holidays and Caledonian Travel in Scotland. It has travel shops in Newcastle, Middlesbrough and York. Shearings has 40 hotels across the UK.