There is an overlap between the two retailers in Birmingham. The Beatties store in the city and the outlet in Dudley, West Midlands, are the only two unprofitable Beatties shops.
HoF intends to apply its logistics processes, store organisation structures and procedures to the Beatties stores. It also intends to improve product ranges and reduce head-office costs.
The retailer will contribute£4 million to Beatties' pension scheme and a further£9 million over the next two years.
HoF chief executive John Coleman said: 'This is a significant and exciting step in House of Fraser's growth story. The addition of the Beatties stores will add 653,000 sq ft [60,665 sq m] of profitable retail space, strengthening House of Fraser's nationwide coverage.
'With the identified synergy benefits and the potential to realise property values significantly in excess of book value, the House of Fraser board is confident it is well placed to deliver further progress.'