BRUSSELS—The European Union on Thursday approved HeidelbergCement AG's €1.67 billion ($1.86 billion) deal to acquire a 45% stake in Italcementi SpA, on the condition the merged company divests all of the Italian cement-maker's business in Belgium.

The European Commission, the bloc's antitrust body, said it initially had concerns the postmerger company wouldn't have faced enough competition from other rivals, leading to higher cement and concrete prices in the EU.

But HeidelbergCement's commitment to shed Italcementi's business in Belgium, where the two companies' activities have "substantial overlaps" and would have had a combined market share above 50%, addresses those concerns, the EU added.

"I welcome the proposed commitments as they will ensure that HeidelbergCement's multibillion euro takeover of Italcementi will not harm effective competition," said EU antitrust chief Margrethe Vestager.

The deal, announced last July, would create the world's second-biggest producer of cement and the third-largest in ready-mix concrete, according to HeidelbergCement.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

May 26, 2016 10:05 ET (14:05 GMT)