Bullring Birmingham
The Bullring in Birmingham. Reuters

Shopping centre owner Hammerson has reached an agreement for the takeover of rival Intu for approximately £3.4bn ($4.6bn), in a deal that will create Britain's biggest property company.

Hammerson, the owner of the Bullring shopping centre in Birmingham said on Wednesday (6 December) that the deal will see its shareholders own 55% of the combined firm, while Intu investors will own the remaining 45%.

Along with the Bullring, Hammerson also owns London's Brent Cross shopping centre and Bicester Village designer outlet, while Intu controls the Trafford Centre in Manchester and the Lakeside Shopping Centre in Essex.

The newly formed firm would have combined assets worth £21bn across the UK and Europe and a stake in 12 of Britain's 20 so-called supermalls - large shopping centres of more than 20 million sq ft that attract more than 20 million customers a year.

The two companies added shareholders will vote on the deal next year, adding the combined group will be led by Hammerson chief executive David Atkins and chaired by Hammerson chairman David Tyler.

"This transaction will deliver real value for shareholders," said the latter.

"The financial strength of the enlarged group and its strong leadership team will make it well-placed to take advantage of higher growth opportunities on a pan-European scale."

Intu chairman John Strachan added: "Intu offers high quality retail and leisure destinations in the UK and Spain, which, when merged with Hammerson's own top-quality assets in the UK, in France and in Ireland, present a highly attractive proposition for retailers and shoppers in Europe's leading cities."

GlobalData retail analyst Sofie Willmott said the deal would "bolster the group's negotiating power with both retailers and leisure operators", adding she expected the newly-formed company to prioritise the development of large shopping centres.

"As clothing and footwear retailers focus on supermalls to create large-scale, experience-led stores, physical retail spend will move away from town centres towards destination shopping centres, ensuring supermalls space is hot property," she said.

"The proposed deal will net the group a stake in almost 60% of all UK supermalls space, making it a force in the retail landscape, well placed to benefit from retail spend shifting across locations."

Shares in Intu jumped by nearly 19% on the news, while Hammerson's fell by 3%.