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Shaftesbury PLC and Capital & Counties Properties PLC on Saturday confirmed that they are in advanced talks for a potential all-share merger of both companies.
The merger would create a real estate investment trust focused in the West End of London, holding a combined portfolio of 2.9 million square feet of lettable space located in Covent Garden, Carnaby and Chinatown.
Under the merger's terms, shareholders in Shaftesbury excluding Capco will own 53% of the combined firm, while Capco's own shareholders will pick up a 47% interest. Capco currently holds a 25% stake in Shaftesbury.
Shares in Shaftesbury closed 0.8% lower at 577.00 pence on Friday in London, giving a market capitalisation of £2.2 billion.
Capital & Counties closed 2.9% higher at 165.40 pence on Friday in London, giving a market cap of £1.41 billion. Its Johannesburg shares were 0.8% lower at R 31.45.
The combined company will include Jonathan Nicholls as chair, Ian Hawksworth as chief executive officer and Situl Jobanputra as chief financial officer.
At Shaftesbury, CEO Brian Bickell will step down after 11 years in the role once the deal is complete, while at Capco Chair John Staunton will retire on completion.
The merger is expected to be structured as an acquisition of Shaftesbury by Capco, however thhe final terms of the merger have not been finalised and a firm offer has not yet been made.
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