TORONTO, JULY 8 -- JMB Realty Corp. of Chicago today signed a definitive agreement to buy Cadillac Fairview Corp. for $2 billion, slightly less than initially proposed.

Cadillac Fairview also disclosed that a proposed sale of much of its U.S. property holdings to an investor group for $450 million may not go through.

President Bernard Ghert said directors approved the agreement this morning. The deal, believed to be the largest Canadian real estate transaction ever, was scheduled to close Oct. 31.

JMB agreed in principle May 8 to acquire Cadillac Fairview for $2.06 billion -- or $26.43 each for some 77.9 million common shares. Shareholders originally were to have the option of cash or a combination of cash and preferred shares of a new company that would hold Cadillac Fairview. But the final deal called for $25.67 a share in cash, a total $2 billion.

Ghert said the structure of the deal was altered because of proposed amendments to Canada's tax system.

Cadillac Fairview earlier announced it agreed in principle to sell virtually all its U.S. office building and business park assets to a corporation to be formed by Michael Prentiss, president of the company's Urban Development unit in Dallas. Other investors included Copley Real Estate Advisors Inc.

But Ghert told shareholders it was not certain a definitive agreement would now be reached, although negotiations were continuing.

Cadillac Fairview, which is 50 percent owned by the Bronfman family of Montreal, recorded net income for the fiscal year ended Feb. 28 of $31.7 million, compared to $42 million a year earlier. Its assets are valued at $3.1 billion.