Managing director Mike Gee has said there will be no redundancies as part of the merger. The combined company is to be renamed Denmaur Independent Papers.

He said: "This change will combine all the strengths of Denmaur and Independent into one entity.

"A single company with a common sales and marketing purpose will improve effectiveness and efficiencies by using the same software system, marketing and logistics."

Gee said sales of the £80.7m-turnover company have held up with an all time record in September.

"However, there is no doubt there are challenges with the weakness of sterling and I do expect further consolidation in the sector in 2009."

Earlier this year, Independent Paper opened a London sales office, months after it shut down its Swanley branch.

Gee added: "In the last recession we grew our business. Whilst credit disciplines as then are paramount, we endeavor to achieve the same this time round."

Media Paper Management, the other subsidiary of the Denmaur Group that specialises in paper for publishing and direct mail companies, will be unaffected.

Independent Paper is a wholly owned subsidiary of Denmaur and the merged company will have a single management structure.