The board of Investa Office Fund has agreed to a $2.5 billion takeover bid from rival Dexus Property Group.
The two property investment trusts have entered into a binding agreement to complete the merger, which will create the largest Australian office trust, with combined assets worth $24.1 billion.
Both companies are focused on office properties in business districts in Sydney and Melbourne, and the deal is expected to produce revenue and cost synergy benefits over the medium term, they said.
The agreement follows an offer from Dexus earlier this month, under which it offered to pay 0.424 Dexus securities and up to 82.29 cents in cash for every IOF unit.
The two parties have since completed due diligence.
Dexus' bid implied a price of $4.11 per IOF unit, or a premium of 7.3 per cent over Investa's last close before the announcement. At 1526 AEDT, IOF shares were trading at $4.08 each.
Investa Listed Funds Management's board committee explored a wide range of alternatives to maximise value for IOF unitholders, but concluded that the Dexus agreement was attractive, its chair Deborah Page said.
The boards of both Dexus and Investa have urged shareholders to back the deal.
The deal is likely to be completed by the end of April 2016, with unitholders expected to vote on the proposal at a meeting in early April.
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