The first ‘Shrek's Far Far Away Adventure’ will make its debut in 2015 on London’s South Bank next door to Merlin’s existing attractions, the London Eye, the London Aquarium and the London Dungeon.
Five more attractions are planned over the next nine years in what will be the group’s sixth ‘midway’ brand.
The company, which also manages Madame Tussauds, Legoland and Thorpe Park, has teamed up with DreamWorks Animation for the project, which will also feature popular characters from Madagascar and Kung Fu Panda.
Shrek, featuring a giant green ogre voiced by Mike Myers, is the biggest animated franchise of all-time, with short films, spin-offs and even a musical following the original four box office smashes.
Shrek-themed rides have proved a hit with families at Universal Studios parks.
Merlin’s chief executive Nick Varney said: “Developing an attraction based on Shrek and his friends is hugely exciting for Merlin Entertainments and the start of what we hope will be a wider collaboration with DreamWorks Animation.
“Merlin's expertise in delivering memorable days out for visitors and DreamWorks' skill in developing globally recognized entertainment franchises will be a winning combination.”
Merlin shares were marginally up at 376p, more than 60p above the offer price set for November’s closely-followed IPO.