Westfield founder Frank Lowy says a move to split its Australasian and international businesses is a "win-win" that will help both companies to grow.
Westfield Group has announced it will merge its Australian and New Zealand assets with those of Westfield Retail Trust, which was spun off from the main company in 2010, to create a new company called Scentre Group.
Meanwhile, the faster growing international business will become Westfield Corporation.
Mr Lowy said the separation was in the interests of both businesses.
"This is really a win win situation for both companies," he said.
"They can each operate more efficiently, and generate greater growth and value for investors, by being independent."
Invast chief market analyst Peter Esho said the decision to split the companies would help drive Westfield's global expansion.
"I think its a clever deal; what it allows Westfield to do is free itself up of capital and pursue international growth," he said.
Mr Lowy said the outlook for both companies was strong, even though the expanding international entity is seen by analysts to have greater long term growth opportunities than the mature Australasian operations.
"There is no question about Australia's growth in retail and there is no question about the opportunities that Westfield Corporation will have globally," he said.
Mr Lowy, who co-founded Westfield in the late 1950s, will chair both companies.
His sons Steven and Peter, who are co-chief executives of Westfield Group will both head Westfield Corporation, though Peter will step down from the role in about 18 months time.
Current Westfield Group chief financial officer Peter Allen will become chief executive of Scentre.
Mr Lowy said his position as chairman of both companies would help ensure a smooth transition.
"I think I will bring with me the culture of the Westfield Group and I think the transition will be smoother," he said.
And the 83 year old said he had no plans to retire any time soon.
"I don't know when I will step down, I hope to work for a long long time to come," he said.
Scentre is expected to be listed on the Australian Securities Exchange in mid 2014, while the Lowys are considering whether to list Westfield Corp in Australia, the UK or the US, though a joint listing is likely.
The Australasian business owns more than $28.5 billion worth of shopping centres, with a development pipeline of more than $3 billion, while Westfield Corporation will own more than $US17.6 billion ($A19.31 billion) worth of assets in the US, UK and Europe, with a future development pipeline of more than $US9 billion.
Westfield Group shares were up 33 cents to 10.69 at 1430 AEDT, while Westfield Retail Trust Shares were down five cents to $2.95.