Shareholders of Chinese largest online video providers -- Youku Inc. and Tudou Holdings Ltd. -- have approved the merger of the two companies.

The deal received shareholder backing on Monday, after the proposal was initially announced in March.

Once all procedures are completed, Tudou will become a privately held company and a wholly owned subsidiary of Youku. The business will be called "Youku Tudou Inc."

Both companies reported net losses last year. Tudou had a deficit of 511.2 million yuan for the fiscal year of 2011, while Youku reported Monday, losses of 172.1 million yuan.

As a result of the merger, Tudou's American depositary shares will no longer be listed on the Nasdaq Global Market.

The deal between the online video rivals came after the pair agreed to merge through a 100 percent stock swap to forge a combined organisation.

According to the agreement, Youku shareholders and holders of its American depositary shares will own about 71.5 percent of the new business, and those of Tudou will get the remaining 28.5 percent.

China's online video watchers totaled 325 million in 2011, accounting for 63.4 percent of the country's overall Internet users, official data showed.

Meanwhile, the market value of the online video industry almost doubled in 2011 to hit 6.27 billion yuan (about 1 billion U.S. dollars).

The industry is providing Internet users with a range of films, TV dramas and other video clips.