The boards of London's West End landlords Shaftesbury PLC (LSE:SHB) and Capital & Counties (LSE:CAPC) Properties PLC said they are in "advanced discussions" regarding a possible all-share merger.
Under proposed terms, Shaftesbury shareholders will own 53% of the combined real estate investment trust (REIT), and Capco shareholders the remaining 47%.
Capco bought a 25.2% stake in Shaftesbury in June 2020 for £436mln from Hong Kong billionaire Samuel Tak Lee.
The ownership ratios have been agreed between the two boards based on the relative net tangible assets and market capitalisations of both companies.
The combined REIT would own a portfolio of around 2.9mln square feet of retail, hospitality, office and residential space in London destinations including Covent Garden, Carnaby Street, Chinatown and Soho.
Jonathan Nicholls, currently chairman of Shaftesbury, would hold that same role, while Capco's boss Ian Hawksworth would be chief executive and his chief financial officer would remain Situl Jobanputra.