The West Midlands Cooperative Society plans to merge with its bigger counterpart in Oxford, Swindon and Gloucester to create the country's fourth biggest Co-op.
The move - if it is approved by members - will create a retail business with sales of £500 million a year.
Job losses among the two societies' 7,000 employees have not been ruled out but the West Midlands' 49,000 members should see the return of the Co-op's famous "divi" after an absence of some 25 years.
On the face of it, the merger looks more like a takeover of the West Midlands by the Oxford, Swindon & Gloucester (OS&G).
With sales of about £342 million, a membership base of 125,000 and a payroll of more than 4,000, the OS&G is about twice the size of the West Midlands.
However, Ben Reid, chief executive of the West Midlands and current holder of the Variety Club Midland business leader of the year award, insisted that the deal was in fact a true merger.
"If you break the businesses down into their component parts, food is the biggest business for both of us," he said.
"The two will go together quite neatly and we will put the managements together.
"We are specialists in pharmacy and travel and the OS&G are not in either of those businesses although it does have a number of outsourced travel agencies.
" They operate nursery facilities which we do not have and they will be bringing that skills set to the West Midlands. They also run a number of motor franchises which we do not.
"We will be able to expand our operations into the Oxford, Swindon and Gloucester areas and vice versa."
At this stage, both co-ops plan keeping their separate head offices - the West Midlands at Walsall the OS&G in Oxford.
Initially the chief executive of the combined business will be OS&G boss Bob Burlton, a major figure in the cooperative movement. He will be succeeded by Mr Reid when he retires in the second half of next year.
"Both societies have said that they expect there to be a net gain in jobs in due course as the new society expands its services to members," they said in a joint statement.
"Both their offices in Oxford and Walsall will be retained, but it would not be sensible to guarantee that no jobs will be affected in the integration of the societies."
Mr Reid said: "This is a good news story and I am reasonably confident that when I stand up and talk to our staff and members I can give a positive message that I can live with going forward.
"The fact that I am prepared to stand down as chief executive and act as the number two for a year shows that."
For the merger go ahead it will need to be approved by members of both organisations at meetings to be held in July and August.
The good news for the West Midlands' members is that the OS&G has helped to pioneer the resurrection of the co-op dividend and will be bringing it back to the area, Mr Reid said.
OS&G president Vivian Woodell said: "Both societies share a vision of helping to create a strong and modern co-operative movement.
"We are convinced that the combined society will be more profitable and hence stronger than if we remain apart."
Doreen Shaw, Mr Woodell's counterpart at the West Midlands, said: "We believe that there will be significant new opportunities to expand the society in the combined trading area, extending the cooperative service we can offer our members."
The biggest co-op in the country is the Co-operative Group, the umbrella organisation for the movement, followed by the United in Rochdale and the Midland in Lichfield.