The anticipation of what he called a "historic" and "very exciting day" kept Canadian Alliance Leader Stephen Harper from sleeping, he said on Thursday.

Harper joked with reporters at the start of a news conference where he and Tory Leader Peter MacKay announced their parties had reached an agreement in principle to unite under one banner in time for the next election.

"It's like Christmas," Harper said. "I have a reputation of not getting excited too often, but I actually had difficulty sleeping last night."

Peter MacKay and Stephen Harper (CP photo)

The two leaders unwrapped what they would both call a gift to the Canadian people: a new conservative party to be called, of all things, the Conservative Party of Canada.

"Today we start to build a bigger conservative family," MacKay said.

The agreement in principle has been in the works for two months. Both parties now must ratify the deal by Dec. 12. A new leader would be chosen in March.

With a federal election looming within a year, the plan is for the new party to run candidates in every riding across the country. All Tory or Alliance nominations already in place would be void.

Harper said the governing Liberals would no longer be able stand for re-election with a divided opposition.

"Our swords will henceforth be pointed at the Liberals, not at each other," he said.

"Vote splitting has hobbled the conservative movement in this country for years," said MacKay.

Both parties come out winners in the deal, Harper said. "I have absolutely no doubt that the Canadian electorate is the greatest winner."

MacKay, who earlier this year at the Progressive Conservative leadership convention promised rival David Orchard not to pursue a deal with the Alliance, denied he had broken that vow.

"I've kept my commitments to David Orchard," he said.

Both men said they would wait before deciding if they would seek the leadership of the new party.

Reaction mixed to united right

Joe Clark, the former Tory leader and one-time prime minister, praised MacKay for entering the negotiations and fighting to preserve Progressive Conservative values.

"I commend my leader, Peter MacKay, for his courage in taking this initiative, and his determination in negotiations with the Canadian Alliance," Clark said.

"Now it is the responsibility of individual members of my party to take decisions of their own," he said.

Some Tory members, however, reacted less positively to the deal.

Manitoba Tory MP Rick Borotsik said the deal isn't a merger, it's takeover.

The Tories and the Alliance are worlds apart, he said, on things such as bilingualism and medicare.

Federal NDP Leader Jack Layton said he thinks disaffected "red Tories" will be angry enough about the deal to come to his party.

Bachand staying put

One PC member of Parliament who isn't making any move yet is André Bachand.

The only Quebec Tory in the caucus has said he was against a merger, but told reporters on Thursday he would have to see the end result of the process under way.

To answer speculation he might move to the Liberals, he held a news conference, where he said: "I have a party. It's the Progressive Conservative party."

He said Liberal cabinet minister Denis Coderre called him seven times in one day. "I didn't return his calls," he said. "Or the BQ either."

There, he said he was skeptical of the proposed deal, but would wait to see what Quebecers say about it.