The planned merger between Deans Foods and Stonegate would give the new company a 46 per cent control of the UK's egg supply.
The new company, to be called Noble Foods, will be equally owned by Peter Dean of Deans Foods and Michael Kent of Stonegate, the British Free Range Egg Producers Association reported in its online newletter.
According to reports in other media, the Office of Fair Trade is investigating the proposed merger to determine whether it would result in unfair competitive practices in the egg market.
Deans Foods and Stonegate, as subsidiaries of Nobel Foods, will continue offering different approaches to egg marketing.
Noble Foods will have its head office at Tring, Hertfordshire, but both Deans and Stonegate will continue to operate from their existing bases.
The two owners told the association that the new company will be better placed to meet the increasing economic challenges and future legislative pressures facing the egg sector.
"If the UK industry is to continue to provide consumers with the type of eggs they want at an affordable price, it must be organised to optimise the supply chain process of collecting, packing and distributing eggs," they are quoted as stating.
"Both our companies are expert in this field but we believe that by coming together and exploiting the synergies between us, we can create a streamlined, world class company, fit to face the challenges ahead."
Stonegate recently spent £5m in upgrading facilities at its dedicated free range and organic egg packing operation at Lacock in Wiltshire.
When the work is completed in September the centre will be able to pack 6,000 free range and organic eggs a minute, Kent claimed.
"The ultimate aim is to see that level of efficiency rolled out across the whole company," he told the association.
According to Poultry World magazine Deans Foods holds a 34 per cent share of UK egg production. Stonegate holds a 12 per cent share. Fridays, Oakland Farm and Glenrath Farms hold a five per cent share each.
The total UK output is about 12.5 million dozen eggs a week