Conservatives allied with German Chancellor Angela Merkel have said they had reached a deal to form a coalition government in the state of Bavaria after losing their majority there in an election last month.

The dpa news agency reported Friday that the Christian Social Union, the Bavaria-only ally of Merkel's Christian Democrats, had reached a deal with the smaller, conservative Free Voters party.

Dpa reported that the coalition deal would be signed Monday, opening the way for Bavarian governor Markus Soeder to be re-elected at the head of the regional government on Tuesday.

Bavaria is home to many of Germany's most prominent businesses, including industrial machinery maker Siemens AG, automaker BMW and sports gear firm Adidas.

The Christian Social Union is part of Merkel's government coalition at the federal level.

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