Shopping centre owner Hammerson has agreed an all share takeover of rival Intu in a £3.4bn (€3.84bn) deal that will create Britain’s biggest property company.
The likes of Intu-owned Lakeside and the Bullring in Birmingham, controlled by Hammerson, will come under one roof, forming a £21bn (€23.7bn) giant.
The deal represents a value of 253.9p per Intu share, equivalent to £3.4 billion.
Hammerson boss David Atkins said that as part of the tie-up, the new group will offload at least £2bn (€3.8bn) worth of shopping centre assets, primarily in the UK.
It comes at a time when consumer confidence has taken a pounding following the Brexit vote, resulting in a sharp decline in retail sales.
Instead, Hammerson will target high growth markets in Europe such as Spain and Ireland.
Mr Atkins described the UK retail market as "challenging" and said that there is a "polarisation" between the best and worst shopping centres.
The group also plans to slash costs to the tune of £25m (€28m) a year.
Intu also operates the Trafford Centre in Manchester while Hammerson owns Bicester Village and Brent Cross shopping centre.
The combined group will be led by Mr Atkins and Hammerson chairman David Tyler.
Shareholders will vote on the deal next year, with Intu having already secured more than 50% of investor support for the all-paper deal.
Mr Tyler said: "This transaction will deliver real value for shareholders.
"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."
Shares in Intu, which had been rocked this year, rose over 19% in early morning trading to 238p following the news.
Hammerson shares were down 2% to 523p.
Jasper Lawler, head of research at London Capital Group, said: "Intu shares were down over 25% year to date before the announcement so it’s an opportunistic buy.
"Intu share prices losses have accelerated on signs British shoppers are tightening purse strings. The cost of living squeeze on UK consumers from higher inflation is forcing companies like Hammerson and Intu into action.
"Online shopping means shopping centres and high street shopping are in a long-term malaise. Shareholders will want to see assets sold down in the merged company to help fund the deal and to reflect the lower demand for brick and mortar stores."
The acquisition will result in Hammerson shareholders owning 55% of the combined firm and Intu investors the remainder.
Mr Atkins added: "This marks an exciting milestone in the history of Hammerson.
"The acquisition creates a leading pan-European platform of desirable retail and leisure destinations which are better positioned to serve the needs of our retailers, excite our customers and support our partners and communities."