The combined group, to be known as Exel Plc, would serve two-thirds of the world's 250 largest companies and have pro forma revenues of more than 3.5 billion pounds, Ocean said.

Ocean will offer 0.2774 new shares for each NFC share and `new Exel' - NFC was to change its name to Exel this month - will be around 50 per cent-owned by each company's shareholders.

Shares in NFC surged 30 pence or 11.4 per cent to 293 pence, while Ocean was unchanged at 10.60 pounds by 0830 GMT.

The merger combines Ocean's leading position in air-freight forwarding through MSAS Global Logistics with NFC's strength in ground-based supply chain services, the companies said.

``The time is now right to combine the strengths of Ocean and NFC to create a business with immediate and outstanding global capabilities and huge opportunities for the future,'' said Ocean chief executive and CEO-designate of new Exel John Allan.

The companies said they aimed to capitalise on the global logistics market, expected to grow by between 10 and 20 percent per annum with the rise of e-commerce and a trend among multinationals to outsource logistics.NFC's John Devaney will be chairman of new Exel and David Finch, NFC finance director, will be chief financial officer.

``The merger we are announcing today represents a rare opportunity to create a global sector leader capable of delivering unrivalled service to our customers and significant value to our shareholders,'' Devaney said in a statement.

The group expects to see annual cost savings of 15 million pounds within two years after an initial cost of 30 million.

Ocean also announced its full-year results, which showed underlying profit before tax, goodwill amortisation and exceptional costs rose 0.5 per cent to 83.5 million pounds on a 33.5 per cent rise in turnover to 1.77 billion pounds.