Ignis Investment Services, owned by British life insurer Phoenix Group, revealed today that it has proposed to merge its UK Commercial Property Trust with F&C Commercial Property Trust. The new enlarged company would be worth £1.6 billion after the merger.

According to the proposal, new company will be managed by Ignis Investment Services. Ignis said that the merger would create an entity which has a strengthened property portfolio with a lower expense ratio.

"The merger would create one of the largest UK listed property companies with a larger free float and greater liquidity making it more attractive to institutional investors and helping to drive value," said Ignis.

According to the proposal, all of F&C's property holding units could be sold in exchange for the issue to F&C shareholders of shares in UKCPT. The exchange would be on a net asset value to NAV basis. The offer also allows the shareholders of F&C a cash exit at 91 pence per share.

However, Phoenix Group and Friends Provident, the major shareholders of UKCPT and F&C respectively, are supporting the proposed merger. Phoenix Group has reportedly agreed to buy 16.15% of F&C Commercial Property Trust's shares from Friends Provident.