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Segro, the pan-European industrial property firm, is set to take over its long-time rival, Brixton plc. On Thursday it was announced the boards of both UK-based companies had reached an agreement on Segro's all-share offer.

Subject to certain conditions, including approval by Brixton's shareholders, the takeover is scheduled for completion by the end of August.

Segro's offer values the entire share capital of Brixton at £109.4 mln (just under EUR 129 mln). This is a huge discount on Brixton's portfolio, which was valued at almost £1.8 bn at the end of 2008. However, Brixton was lumbered with £862 mln of debt at end-2008 and is in danger of breaching its loan covenants.

In contrast to the largest UK REITS, Land Securities, British Land, Hammerson and Segro, Brixton did not come with a rights issue this year to improve its financial position. Segro raised £500 mln in its rights issue a few months ago.

Commenting on the bid for Brixton, Segro chairman Nigel Rich said: 'By taking this unique opportunity to combine the assets of the UK's leading industrial property companies, we are strengthening Segro's position as the largest industrial REIT in Europe with critical mass in key markets in and around Europe's major cities and transport hubs.'

The combined group will have a property portfolio of £5.5 bn (EUR 6.4 bn) based on property valuations at end-May 2009.

Segro is a UK real estate investment trust (REIT) and is active in the UK and nine countries in Continental Europe. The company's portfolio comprises over 473,000 m² of business space, which generates an annual rent roll of EUR 439 mln.

Segro said the link-up with Brixton would reinforce its cluster strategy and increasing its exposure to Brixton's heartland in the Heathrow area and West London.

Brixton shareholders will receive 0.175 of a consideration share of 10 pence each - the equivalent of 1.75 Segro shares of 1 penny each, adjusted to reflect Segro's proposed Share Consolidation - for every 1 Brixton share.

Segro also announced its intends to raise £250 mln by an open offer at 210p per share to help fund the acquisition and pay down Brixton's debt. In addition, Segro unveiled an offer to buy back Brixton bonds up to a maximum of about £325 mln.