Shopping centre landlord Hammerson has reached agreement to acquire rival Intu in a deal that values the latter at £3.4bn.

The deal would create a £21bn pan-European portfolio of retail and leisure destinations, which the respective boards described as representing a “leading European retail REIT with a strong income profile and superior growth prospects”.

The companies said the proposed deal, at 253.9p per Intu share, would provide the opportunity for significant rationalisation through an anticipated disposal programme of at least £2bn.

The enlarged group will be led by Hammerson chief executive David Atkins and the company’s chief financial officer Timon Drakesmith and will be called Hammerson plc.

Hammerson’s chairman David Tyler will take on the same role at the enlarged group, while Intu’s chairman John Strachan will join the board as senior independent director. The enlarged group overall will have six directors nominated by Hammerson and four directors nominated by Intu.

Hammerson said it had received irrevocable undertakings or letters of intent from shareholders representing approximately 50.6% of Intu’s issued share capital.

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.”

Atkins said: “This marks an exciting milestone in the history of Hammerson. Bringing together the high-quality portfolios of both companies establishes Hammerson as a larger, leading European retail REIT, enhances shareholder returns and supports opportunities for long-term growth. 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. I hold Intu’s high-quality centres in high regard and I look forward to working with a strengthened team to enhance the performance of our entire portfolio.”

Strachan said: “A combination of both Intu and Hammerson will create a more resilient, diversified and stronger group that we believe will benefit all our stakeholders. Intu offers high-quality retail and leisure destinations in the UK and Spain, which when merged with Hammerson’s own top-quality assets in the UK, in France and in Ireland, present a highly attractive proposition for retailers and shoppers in Europe’s leading cities. I am proud of the financial and operational success that Intu’s management team has delivered and pleased to see that the intu brand will continue.”