Stade Francais and Racing 92, two leading clubs both based in the Paris region, have announced plans to merge.
The clubs, which have both struggled this season in France's premier Top 14 league, said in statements on their websites that the combination would create a new, stronger club that could enjoy a bigger fanbase in the French capital.
Star players in the Racing 92 squad include New Zealand World Cup winners Dan Carter and Joe Rokocoko, while Stade Francais have Wallabies playmaker Will Genia on their books.
Wealthy businessmen have invested large sums of money in recent years into French rugby clubs, allowing them to sign top players from around the world.
Racing is owned by French property billionaire Jacky Lorenzetti, while businessman Thomas Savare is the current club president of Stade Francais.
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Racing beat Toulon last year to win the French Top 14 title in front of a record crowd of more than 90,000 fans in Barcelona's Camp Nou stadium.
