Pure Gym and The Gym Group will link up in a bid to help the two companies continue their expansion amid growing consumer demand for "low-fee, high quality and flexible health and fitness club memberships".
It is thought that the merger - which is subject to regulatory approval - will create a group worth around £300 million.
Pure Gym, which launched in 2009, operates 61 24-hour gyms across the UK. Members pay monthly with no contract commitment. Funds affiliated with CCMP Capital Advisors bought a majority stake in the business last year.
The Gym Group was founded in 2007 and operates 42 sites across Britain. It also operates a low-cost business model with contract-free membership. Phoenix Equity Partners bought a majority stake last year.
Financial terms of the merger, and the name of the new network, have not been disclosed. The businesses will continue to operate separately until regulatory approval and completion terms are finalised.
John Treharne, chief executive of The Gym Group, will also head the new group. Peter Roberts, chief executive of Pure Gym, will become executive chairman.
Mr Roberts said: "This agreed deal unites two innovative players in the fast-changing gyms sector, where the low-priced model is improving consumer choice and contributing to better exercise levels across the country.
"We expect our complementary brands and locations to encourage even more people to join gyms."
Mr Treharne said: "Customers want total flexibility and value-for-money options when it comes to keeping fit.
"This enlarged business, combining great facilities and excellent trainers, will provide a compelling alternative to existing gym providers."