The merger of Smithfield Foods' European subsidiary and Spanish meat group Campofrío has won shareholder approval.

Investors in Groupe Smithfield and Campofrío, Spain's largest processed meats maker, have given the green light to a deal that will create the biggest firm in the sector in Europe and the fifth-largest worldwide.

The new company, to be named Campofrío Food Group, has sales of over EUR2.1bn (US$2.6bn) and generates around EUR190m of EBITDA, according to pro-format combined figures as of December 2007.

Regulators in Spain must now give clearance for Smithfield to launch a takeover bid on Campofrío's shares, since its stake in the new company will exceed the legal threshold of 30% of voting rights.

Once finalised, Smithfield, which currently owns 24% of Campofrío, will be the largest shareholder in the business with a 37% stake. Oaktree Capital, Smithfield's venture partner in Groupe Smithfield, will have a 24% stake in the enlarged company.

"Today we have taken a definite step towards the creation of a new European leader in the processed meats sector," said president and CEO of Groupe Smithfield Robert Sharpe II on Friday (24 October).

"By expressing their support, both Campofrío's and Groupe Smithfield's shareholders have demonstrated their confidence in this operation, that will generate value for all our shareholder, business partners, customers and consumers."

Campofrio president Pedro Ballvé agreed that the move would "generate value for all stakeholders of the company".

He added: "It is a solid operation with a strong strategic significance."