Listed Dutch real estate companies Vastned Offices/Industrial and Nieuwe Steen Investments announced on Wednesday that they have reached agreement on a merger.

The move will create a new Dutch mixed real estate investment fund, listed on NYSE Euronext Amsterdam, with about EUR 2.4 bn of office and retail property in the Netherlands, Belgium, France, Germany and Switzerland. The new entity will own more than 300 properties with potential to generate over EUR 200 mln in annual rental income. The agreement is subject to approval by shareholders of both companies.

Euronext-listed Vastned Retail, which is part of the Vastned Group but has its own management, is not part of the merger. The retail assets in the new merged fund will come from NSI.

The exchange ratio for the merger is set at 0.897 NSI shares for each Vastned O/I share. In addition, each Vastned O/I shareholder will receive one Value Retention Warrant per share in relation to Vastned O/I's holding in Belgian property company Intervest.

The announcement of the deal came days after the two sides confirmed the resumption of talks after an earlier attempt which lasted from December to February stranded.

Those talks centred on a proposal on an exchange rate of 0.85 of a NSI share for each Vastned O/I share. The exchange rate increased to 0.88 before breaking down. Afterwards Vastned CEO Reinier van Gerrevink was replaced at the helm by interim CEO Henk Porte.

The two companies restarted the talks last Friday. The deadlock was broken as NSI increased its offer fractionally to 0.897, representing a 19% premium on Vastned O/I's share price on 10 December when the first round of negotiations began.

Although NSI and Vastned O/I have presented the agreement as a merger, it has the hallmarks of a takeover by NSI of its new partner.

Vastned O/I will disappear from the stock exchange on completion of the deal. In addition, the new combination will be led by NSI's CEO Johan Buijs and his current chief financial officer Daniël van Dongen. 'That was clear right from the start,' Buijs told a press conference in the Hilton Amsterdam on Wednesday morning.

Johan Buijs said the combination creates 'a new Dutch leading mixed real estate company offering shareholders exposure to both offices and retail markets. We are confident about the strategic rationale and the significant scale advantages offered by the combination with Vastned O/I.

'The merger fits well with our strategy and ambitions to play a leading role in the consolidating real estate investment industry. Size is becoming more and more a decisive factor in order to create attractive shareholder returns in the long term and compete for larger high-yield retail and office properties without affecting the risk profile of the company.'