Bear Stearns' problems caused shockwaves in global financial markets
Shareholders of the stricken US finance giant Bear Stearns have approved its $2.2bn sale to Wall Street rival JP Morgan Chase.
Investors backed the $10-a-share bid at a special meeting in New York.
Bear Stearns was rescued by the US Federal Reserve after worries about its financial position led to a collapse in confidence by some of its clients.
It is the main victim of the credit crunch caused by vast bank losses linked to the US housing market.
JP Morgan Chase will assume control of Bear Stearns on Friday, ending its 85 years as an independent company.
Some shareholders were angry at having to accept what they regard as a knock-down price since Bear Stearns shares were worth $158 (£80) at their high point last year,
But its shares have lost most of their value since then after the bank suffered billions in losses from mortgage-backed investments and was forced to seek $30bn in emergency funding from the US central bank after debilitating rumours about its financial stability.
Regulators and Treasury officials encouraged JP Morgan Chase's bid as the quickest way of stemming the crisis of confidence at Bear Stearns and preventing its spread to other banks.
JP Morgan was forced to improve the terms of its original $2 per share offer in an attempt to win over disgruntled investors.
Its revised bid values Bear Stearns at $2.1bn.
This is well above its initial $236m valuation but a fraction of the $18bn that Bear Stearns was worth last year before the onset of the worst US banking crisis in a generation.
JP Morgan also altered the terms of the deal to accept some of the liability for any losses from Bear Stearns' less liquid assets and to guarantee some of its borrowing.
It also agreed to buy 95 million newly issued shares in Bear Stearns, equivalent to just under 40% of the firm's equity.
JP Morgan Chase described the deal on the table as "fair" and says it reflects the value of the Bear Stearns business and the risks associated with it following its high-profile problems.
Analysts have said the deal will give JP Morgan Chase control of Bear Stearns' successful brokerage business but leave it vulnerable to further deterioration in the mortgage market and to potential lawsuits stemming from the sub-prime crisis.
Bear Stearns' board, which is backing the revised deal, has said it offers greater value to shareholders and certainty to employees and customers.
It is likely the deal will result in more than half of Bear Stearns' 14,000 strong workforce losing their jobs as its operations are streamlined.