James Coughlan, joint director of Holiday Malta, said the businesses had been in talks for “a number of months” and that there were “compelling reasons to merge”. 

"Magic Rooms is a dynamic, trade-only business and a great complement to our existing business; the merger will really accelerate our growth plans," he added. 

Magic Rooms was set up in 2014 by former Thomas Cook chief executive Manny Fontenla-Novoa, who is currently chairman of the business.

Holiday Malta is part of the SMS Group and comprises brands including Belleair, Malta Direct and Flexicruise, with Belleair having recently announced a raft of new destinations.

Coughlan said it is currently "business as usual" for the two companies, but that functions such as purchasing and distribution strategy will be considered going forward. 

The companies are currently in dialogue with the CAA and hope the deal will be complete by May 31.