Redefine Properties International (RIN) announced on Wednesday that its subsidiary, Redefine International plc, would merge with Wichford following an agreement reached between the two companies. The deal was still subject to conditions precedent.

"The boards of Wichford and Redefine believe that the merger substantially enhances the strategic position of both Wichford and Redefine through the creation of a stronger, mid-tier UK property company, listed on the main market of the London Stock Exchange and focused on providing an attractive, sustainable and growing income stream for investors," said Redefine Properties International.

The enlarged group was expected to seek to raise equity capital on a fully pre-emptive basis to improve its gearing and to assist, inter alia, with the refinancing of Wichford's existing debt maturities in October 2012.

Existing Redefine shareholders would hold about 79.7% of the issued shares of the enlarged group, while existing Wichford shareholders would hold about 20.3% of the entity.

Redefine Properties International, which is listed on the JSE, would become the majority shareholder with about 65.6%.

Redefine chairman Gavin Tipper said: "We are pleased to announce the planned combination with Wichford, which we are recommending to our shareholders. The merger is consistent with our ongoing strategy to build a larger, more liquid company focused on diversified, income-producing investment properties."

Philippe de Nicolay, chairman of Wichford, said the offer combined two businesses with a strong strategic alignment and created an enlarged, income-focused property company with a diversified investment property portfolio, which was supported by a major shareholder of substantial scale.