The deal is part of a wave of takeovers and acquisitions in the retail property industry as sales decline.
Unibail-Rodamco SE said Tuesday that its offer values Westfield shares at $7.55 each, a premium of 17.8 percent on Monday's closing price.
Unibail is the largest commercial real estate company in Europe.
A 90% interest in OneMarket, Westfield's retail technology platform, will be spun-off into a newly formed entity.
The new combined empire will operate under the Westfield brand and be one of the world's leading developers and operaters of shopping centres, across 104 locations, with 27 of those in capital cities, and a total value of AUD$95.52 billion (US$72.2 billion).
Shares of such companies have been hit hard and store closures are accelerating, pressuring landlords to fill empty space and reinvent shopping centers.
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Westfield began in 1959 when billionaire Frank Lowy and his partner John Saunders opened a shopping center in Sydney, Australia. "They will become a dominant player, have the best relationships with retailers and therefore be best placed to create the malls of the future".
Lowy said: "The transaction announced today is the culmination of the strategic journey Westfield has been on since its 2014 restructure". Mr. Lowy, born in 1930 in Czechoslovakia, survived the Holocaust and fought in the Israeli war of independence before moving to Australia.
Westfield chairman Frank Lowy, who launched the company in 1960, said it was with "mixed emotions" that he was announcing the buyout but he was comfortable with the decision, which means he and his two sons Peter and Steven moved from "being executives to being investors".
Jill Margo, author of a biography, Frank Lowy: Pushing the Limits, says the awful experiences of the second world war instilled a deep sense of the importance of family and of determination in Sir Frank. Westfield's portfolio is valued at $32 billion. "I never felt so unjustly criticized as I felt then".
Unibail said it had identified cost savings of £88million, including £53million from slashing corporate overheads. He was knighted by this month for his contributions to the United Kingdom's economy and for his philanthropy.