The office products space has been an industry in consolidation, and now we are closer to the three major players completing their consolidation into one. The acquisition of Office Depot Inc. (NASDAQ: ODP) by Staples Inc. (NASDAQ: SPLS) has now been overwhelmingly approved by Office Depot shareholders. What investors need to keep in mind is that the shareholder approval is not regulatory approval, and the merger still has many hurdles to clear. The very wide merger arbitrage spread should be enough to speak for this.

Both companies entered into a definitive agreement for Office Depot to be acquired back in early February. Office Depot has just announced that its shareholders overwhelmingly approved the proposal for Staples to acquire all the outstanding shares of the company.

At Office Depot’s annual shareholders meeting held Friday, June 19, some 99.5% of the votes cast were in favor of the transaction.

What really matters here is that this M&A deal remains subject to customary closing conditions and, more importantly, antitrust regulatory approval. This is at a time when the U.S. Department of Justice and Federal Trade Commission (FTC) have started to become more critical of certain mergers, after years and years of rarely caring.

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Under the terms of the agreement, Office Depot shareholders will receive $7.25 in cash and 0.2188 of a share in Staples stock for each Office Depot share. The transaction is expected to close by the end of the calendar year 2015. If this were to go through now, it would generate a share price of close to $10.85, but Office Depot shares are still close to $9.20. What does that tell you about merger risk assumptions?

Based on Staples $16.42 closing price on Thursday, the transaction would be valued at $10.84 per share. Earlier in February when the deal was announced, the price would have been $11. Again, is this saying something?

In terms of the financials of this transaction, Staples obtained financing from Barclays and Bank of America in the form of a $3 billion credit line and a $2.75 billion six-year term loan. As part of the transaction, Staples will add two Office Depot directors, bringing its board to 13 members.

There is still a large concern that these companies may face headwinds from antitrust regulators. Staples attempted to buy Office Depot in 1997 but regulators would not allow the purchase due to antitrust concerns. Will this be a repeat performance?

In 2013, the FTC approved Office Depot’s $976 million acquisition of OfficeMax without having to take a closer look or make the office retailer close any stores.

Separately, a major positive for this merger would be that the new combined company would be able to better compete with the likes of Amazon.com Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc. (NYSE: WMT).

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Shares of Staples were up 0.5% at $16.51 early Friday. The stock has a consensus analyst price target of $18.86 and a 52-week trading range of $10.70 to $19.40.

Office Depot shares were up 0.7% at $9.23, in a 52-week range of $4.26 to $9.77. The consensus price target is $10.66.

There is still a lot to consider about closing risks in this merger. Staples does not appear to yet have its Easy Button out.

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