Derwent Valley, the London commercial property developer, is to acquire property firm London Merchant Securities in a deal worth £1bn after seeing off competition from Great Portland Estates.

The merger will create one of London's largest specialist property firms, with a property portfolio worth £2.2bn. The new company will be called Derwent London Plc.

Great Portland had itself been in merger discussions with London Merchant prior to the Derwent deal, but has now confirmed that it won't make an offer for the company. 

Derwent have agreed to exchange 10 new shares for every 67 London Merchant shares, which values London Merchant at 298-pence-per-share. London Merchant shareholders will also own 48 per cent of the new company.