The enlarged firm will trade under the McNaughton name.

It will lead to a rationalisation of branches and redundancies across the two companies.

"Where there is a MoDo and a McNaughton's branch in the same town, there will only be one," said James McNaughton chief executive Ian George. "We are now trying to deal with the people issues," he added.

The firms would not comment on which branches would be affected, but the branch lists show that five offices, or half of MoDo's outlets, appear to be duplicated: Bristol, Birmingham, Cardiff, Leeds and Glasgow.

"I am surprised that this has not come sooner, and it's an indication that the parent company has lost its patience," said one merchant.

Both sides said there were no plans for any product rationalisation.

In a letter to customers, MoDo Merchants managing director Mike Hoyne said that its Graphic ranges of art, silk and ivory, print preprint and envelopes will continue and be expanded.

However sources indicated that a product rationalisation is likely, either at the instigation of the merchant, or by suppliers who may resist the move to have their products sold under the one banner of McNaughton.

MoDo Merchants has 10 branches across the UK, and employs 190 staff with a turnover of 55m.

James McNaughton has a turnover of 200m, with 40 sales offices and 623 employees.

Story by Andy Scott