Merger will create a £21bn firm spanning the UK and Europe

Hammerson has struck a deal to acquire rival shopping centre owner Intu Properties, which owns the Trafford Shopping Centre in Manchester, for £3.4bn.

The agreed takeover will create a £21bn company, which will operate under the retail property developer’s name and be led by the firm’s chief executive David Atkins and chief financial officer Timon Drakesmith.

Brent Cross shopping centre aerial

Hammerson, which is currently undertaking a £1.4bn revamp of its Brent Cross Shopping Centre (pictured), said the enlarged group  planned to target Ireland and Spain as potential growth areas.

For each Intu share they own Intu investors will receive 0.475 Hammerson shares. The deal will result in Hammerson stockholders owning 55% of the new group, Intu shareholders 45%.

Annual cost savings of around £25m will kick in two years after the takeover completes, subject to shareholder approval, while one-off integration costs will amount to approximately £40m.

Hammerson said it was planning at least £2bn of disposals as part of a rationalisation programmed of the combined firm’s portfolio.

Speaking about the deal John Strachan, chairman of Intu and a proposed senior independent director of the enlarged group, said it would present “a highly attractive proposition for retailers and shoppers in Europe’s leading cities”.

Hammerson chairman David Tyler agreed, noting the combined entity would be “well-placed to take advantage of higher growth opportunities on a pan-European scale”.