Two of London’s biggest owners in the West End are negotiating a £3.5bn merger that would bring some of central London’s most famous tourist destinations under one company.

Capital & Counties, which owns Covent Garden and surrounding areas, and Shaftesbury, which has a portfolio spanning parts of Soho, Chinatown and Carnaby Street, are in detailed talks about plans to combine their portfolios.

The deal, which could close in the coming weeks, would value the combined business at around £3.5bn, according to people familiar with the matter.

There has been speculation for the past two years that the two companies could merge, following Capco’s purchase of a 26% stake in Shaftesbury from Hong Kong property tycoon Samuel Tak Lee in the early months of the 2020 pandemic.

The two companies share a major shareholder in Norwegian state fund Norges Bank, which played a role in brokering the talks, according to a person familiar with the matter.

Neighboring landlords have been working together to tackle the coronavirus for the past two years, during which time tourism and shopper visits have collapsed and dragged down property values ​​in the area significantly.

The management teams of both companies have previously spoken about the potential advantages of combining the businesses, including the ability to manage large swathes of the West End.

The combined entity would be able to more easily raise cash to invest in the estate and potentially expand, said a person briefed on the talks, which were first reported by Sky News.

Shaftesbury, with a market capitalisation of £2.2bn, is the larger of the two companies, with Capco valued at £1.4bn.

It is unclear how the combined entity will be managed, but Shaftesbury and Capco chief executives Brian Bickell and Ian Hawksworth will both remain involved, according to a person familiar with the discussions.

Both Shaftesbury and Capco declined to comment.