Protagona will pay 拢2.5m in cash and purchase 97m new Protagona shares at 1.5 pence each, followed by a further payment of up to 拢950,000 subject to the financial performance of the merged group.
The merged company will be headed up by Protagona chief executive Bryan Black, while Swetenhams chief executive Simon Swetenham will become Black's deputy and the largest shareholder in the company.
Swetenham will continue to be involved in the day-to-day running of the business, and he will also be charged with looking at opportunities for the company to expand internationally, particularly in the US.
The company already has offices in the UK in London and Birmingham and in the US in Chicago.
According to Swetenham: "There is already considerable synergy between the two organisations, with a strong shared vision and compatible cultures. Protagona Ensemble is a world leading marketing automation suite and will be the centre-piece of our joint offering, which combined with Swetenhams' leading data provision and data integration services and software, will offer customers the best marketing solution set available."
The deal is subject to the approval of shareholders, which Swetenhams expects to gain at an extraordinary general meeting on September 19.
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