The two companies said the move would "streamline" the experience for businesses, allowing them to "secure a joint PPL and PRS for Music licence with a single phone call or few clicks online, paid for in a single invoice".
The new licences will be available from 2017.
In 2014, the existence of the two companies was described as a "major source of irritation" by financial ombudsman Walter Merricks for small businesses such as pubs, because of the requirement to pay two licenses for the same piece of music.
PPL CEO Peter Leathem said: "Both our organisations firmly believe that the proposed joint venture would be a very positive development for both our customers and our members, building on the successful joint licensing solutions and other joint working initiatives that PPL and PRS for Music have delivered during the past few years."
PRS for Music chief executive Robert Ashcroft added that the move would "significantly" simplify music licensing for UK businesses.