Once the necessary court approvals are received on Friday, the two retail landlords will merge to become the second largest real estate investment trust, behind Scentre Group, on the Australian stock exchange with a market value of $11 billion.

The merged entity, which will eventually have a new name and be based in Melbourne, will have $18.2 billion in annual retail sales, assets under management of $22 billion and will own and manage 102 malls, including Melbourne's Chadstone, Emporium and The Glen, and Chatswood in Sydney.

It also now has the four successful Direct Factory Outlets in Melbourne and Sydney in the portfolio.

Federation, which grew out of the troubled Centro Properties group 6 years ago, previously focused on food-anchored shopping centres, while Novion, which was formerly CFS Retail Property Trust, owned larger regional malls in excess of 20, 000 square metres.

The merger will see the departure of Novion's and formerly Colonial First State's chief executive Angus McNaughton and deputy chief executive Michael Gorman, from the business. The two respected retailers are expected to be invited to take up non-executive board positions.

Speaking after the swift meeting in Sydney's Westin heritage ballroom, the new chief executive, Steven Sewell, said he would look to expand on Novion's fund management business and also boost the development pipeline.

"This is a transformational deal and brings together some of the best and highest quality malls in the country," Mr Sewell said.

"The growth opportunities will come from synergies we can get in the business, development potential of the centres with new capacities such as offices, hotels and apartments, and the ability to co-invest with our joint venture partners."

Mr Sewell said the group would stay Australian based and was expecting that potential acquisitions will be offered from other investors, albeit in a very tightly-held market.

"The debt restructure is critical to the merger before we do any new deals. We are aiming for about 30 per cent gearing and we have enormous capacity in our own debt to fund any new ventures," mr Sewell said.

Under the scheme, the Australian Competition and Consumer Commission said it would not oppose the deal, but added that either Federation's half interest in the Karingal Hub, or Novion's Bayside Shopping Centre in suburban Melbourne would need to be sold.

Mr Sewell said no decision has been made as to which centre would be divested.

The deal comes as retail sales are showing some improvement, a sentiment echoed by Mr Sewell.

"We are seeing positive upswings in retail sales, importantly in the discretionary area of fashion, furniture, electronics and homewares. This is due to the wealth effect of higher house values, lower interest rates and cheaper petrol," Mr Sewell said.

He said the 2016 financial year earnings guidance would be updated in August, a month after the merger is finalised.

The analysts at CLSA said Federation continues to deliver on its strategy of improving its portfolio and metrics and cutting costs.

For the first half of the year, the analysts said operating metrics surprised to the upside, with overheads and debt costs both down, however guidance was unchanged due to dilution from asset sales that improved the portfolio quality.

"Whilst we still favour regional retail, we believe Federation still has juice in the tank to grow in the medium term with a $1.3 billion development pipeline," CLSA analysts said.

"Whilst the business is doing well, acquiring Novion may be an acknowledgment that a higher quality portfolio with more balanced geographic weighting is required longer term."