The two mutual organisations expect the transaction to complete in the second quarter of this year, subject to approval from members, regulators and the High Court.
Fiona McBain, chief executive, Scottish Friendly, which claims to be Scotland's largest financial mutual, today announced that it is in the final stages of securing the takeover.
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Ms McBain said: "This announcement is a tangible outcome of our strategy to diversify and grow the Scottish Friendly Group. The overall efficiency of Scottish Friendly's business has resulted in our ability to competitively tender to take over existing financial services companies and run them more effectively and more efficiently.
"We are particularly proud of having secured the opportunity to double in size. The takeover of M&GM will give us additional economies of scale that can drive further efficiencies and increased value to all of our policyholders, including those transferring from M&GM."
David Gulland, chief executive of M&GM, said to be the oldest active registered company in the UK, said: "As we explained to our policyholders and members in our Strategic Report for 2013, we have been seeking to secure the long-term future of our customers through a transfer to another organisation.
"This involved a thorough process considering a number of potential operations and we were delighted to select Scottish Friendly. We were particularly impressed by the group's efficiency, customer focus and experience in this field. We welcome the fact that all M&GM policyholders will become members of Scottish Friendly as part of this deal."