Meetings to discuss the recommendation will take place in April and May. If approved, the two retailers are expected to merge in late July.
The society's enlarged Trading Group - which would be the world's biggest consumer co-operative - would be headed United Co-operatives chief executive Peter Marks.
David Anderson would continue as chief executive of Co-operative Financial Services, the group's financial arm, which includes Co-operative Bank and Co-operative insurance.
In a joint statement, Co-operative Group chair Bob Burlton and United Co-operatives president Bill Hoult said: 'We are delighted that our two boards have given the green light to the merger. If approved by our members, it will be the most far reaching in the history of the co-operative movement in the UK, creating the world's largest consumer co-operative, with a turnover of more than£9 billion.
'The financial strength of the new organisation is good news for members, staff and customers. In the highly competitive markets we operate in, it will help ensure the continuing growth and profitability of our businesses so that we can reward our members and fulfil our social goals in the communities we serve.'
Marks said: 'The business case for merger is overwhelming. The two societies' activities are geographically complementary and, together account for more than 80 per cent of co-operative retail trade in the UK. The merger would, for the first time, better enable the new organisation to effectively manage the co-operative brand - one of the most trusted in the UK - across all its business activities.'