The deal will see the two companies working together on new-business opportunities and collaborating to develop brand ideas for existing clients that will stretch across advertising to store design, merchandising and logos.
Both St Luke's and The Nest will continue to operate as standalone brands and will be managed separately. Bill Cumming and Giles Brooks stay on as The Nest's creative directors, while Alex Willcock, the company's founder, will help manage the business on a part-time basis.
The Nest, which employs 30 people, currently has a client list including Britvic, Currys, Pizza Express and MFI.
Neil Henderson, the joint managing director of St Luke's, said: "Our vision is to build brand worlds - highly creative, highly integrated brand solutions.
This demands a new set of skills.
Having The Nest alongside us allows us to assemble teams that can develop inspiring creative solutions all rooted in one piece of brand thinking."
In its bid to expand its offering St Luke's is also looking at personal direct marketing and online advertising.