The combined company will include 285 properties and some of its biggest markets will include Atlanta, Houston and Orlando, Fla. The offer valued Colonial shares at about $2.15 billion at Friday's closing prices.
MAA shareholders will own 56 per cent of the combined company upon completion of the deal while Colonial Properties shareholders will get 44 per cent.
The combined company will keep the MAA name and its corporate headquarters will remain in Memphis, Tenn.
Each Colonial share will be converted into 0.36 of a share of MAA. At Friday's closing MAA price, that would be worth $24.46. That is an 11 per cent premium over Colonial's closing price of $22.11 on Friday.
MAA will increase the size of its board to 12 members from seven members. Colonial will nominate four directors and its CEO, Thomas Lowder, will also become a member. Colonial Properties is based in Birmingham, Ala.
MAA CEO and Chairman H. Eric Bolton Jr. will keep those positions at the combined company. MAA Chief Financial Officer Albert M. Campbell III and Chief Operating Officer Thomas L. Grimes Jr. will also retain their titles.
The transaction, which is expected to close in the third quarter, was unanimously approved by both companies' boards. It still needs approval from a majority of both companies' shareholders.
The combined company will continue to trade under the "MAA" ticker symbol.