Aeon is to absorb an ailing Japanese supermarket chain.

Shareholders of Daiei Inc met on Wednesday to approve a takeover offer from Aeon which will see Daiei become a wholly-owned subsidiary through a share exchange in January.

Aeon will reportedly phase out the Daiei brand by 2018.

Hampered by the imposition of a consumption tax on April 1, high profile Daiei has failed to turn around declining earnings in an economy under significant pressure due to Japan’s declining population.

Daiei has 286 supermarkets across Japan.

Daiei President Shohei Murai told shareholders at an extraordinary meeting held to vote on the proposal that the company’s best chance for the future would be to rebuild its business as an operating arm of Aeon, rather than to pursue its own restructuring plan.

Aeon already has a 44 per cent stake in Daiei which currently focuses on greater Tokyo, and in the Keihanshin region covering Kyoto, Osaka and Kobe.