Smithfield Foods Inc. said Friday shareholders of its European subsidiary have approved a merger with Campofrio Alimentacion SA, the largest processed meats company in Spain.

The deal between Groupe Smithfield Holdings SL and Campofrio creates Europe's leading processed meats company, the companies said in a statement. The combined company, Campofrio Food Group, will be headquartered in Madrid.

Smithfield said Campfrio shareholders have approved a capital increase by issuing nearly 49.6 million shares to shareholders of Groupe Smithfield.

Once complete, Smithfield, which had already owned 24% of Campofrio, will be its largest shareholder with a 37% stake. Oaktree Capital Management, which runs Smithfield Holdings as a joint venture with Smithfield Foods, will have a 24% stake.

Spanish regulators must authorize the exemption of Smithfield Foods to launch a takeover bid on Campofrio's shares, since it will have more than 30% of voting rights, the news release said.

The combined company will have sales of at least $3 billion, the companies said when announcing the original deal in June. The company will be the market leader in Spain, France, Portugal and The Netherlands, and have a strong presence in Romania, Germany, Italy, Belgium and the United Kingdom.