About 74 percent of the total outstanding shares of Family Dollar, the No.2 U.S. discount retailer, were voted in favor of the deal on Thursday.
Sources familiar with the matter, reported on Wednesday that Family Dollar’s shareholders would likely support the Dollar Tree merger
According to the Wall Street Journal, Family Dollar agreed to be bought by its smaller rival for $8.5 billion in cash and stock in July and later rejected a $9.1 billion all-cash offer from Dollar General.
The biggest U.S. discount retailer took its offer directly to shareholders in September after Family Dollar’s board rejected its offer, citing antitrust concerns.
“Despite our best efforts… Family Dollar’s lack of engagement and a contracted transaction timeline ultimately prevented us from completing this transaction,” Dollar General CEO Rick Dreiling said in a statement.
The vote was a loss for Family Dollar shareholders as well as consumers, Dreiling said.
“We were open to do a deal with either company,” Family Dollar Chief Executive Howard Levine told reporters after the shareholder meeting.
The Dollar Tree offer was superior as it has more chance of passing regulatory muster, Levine said. He expects the merger to be approved by regulators by the end of March.
If approved by the Federal Trade Commission, the deal will give Dollar Tree more than 13,000 stores across the United States and Canada and more than $18 billion in annual sales.
Dollar General, which has about 11,500 stores, had revenue of $17.5 billion for the year ended Jan. 31, 2014.
Discount retailers are facing increasing competition from small-format stores opened by big-box retailers such as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N) and online retailers such as Amazon.com Inc (AMZN.O).
The U.S. market for such stores grew 45.7 percent to $48.2 billion between 2008 and 2013 and is expected to grow 18 percent in the next five years, according to Euromonitor International.
Family Dollar shares were up 1 percent at $76.35 in early trading, while Dollar Tree rose 2.3 percent to $69.40.
Dollar General’s shares rose 3 percent at $69.21 after the company said Dreiling would continue as CEO through Jan. 29, 2016, unless a successor is appointed earlier. Dreiling was slated to step down at the end of May.