Property income fund Resilient (RES) has launched a formal buy-out bid for rival fund Diversified via a share swap calculated on a ratio of 0.4375 Resilient units per Diversified unit, the two companies said in statement.

"As a result of convergence in the strategies of Resilient and Diversified and changes in market conditions, the benefits of a stand-alone listing for Diversified are now outweighed by the benefits of a merger of the two funds," Diversified said.

It added that the benefits would include an increased market capitalisation, enhanced liquidity in trading of Resilient units and opportunities to extract cost-savings and unlock synergies and funding efficiencies in the enlarged Resilient.

The effective date of the offer will be January 1 2008.

The offer is subject to approval of the Competition Commission and Resilient's unit holders.