NEW YORK — Federated Department Stores Inc. has completed an agreement to purchase rival May Department Stores Co. for $11 billion, creating a $30 billion giant to compete with discounters and specialty and luxury retailers.

Federated said it will pay $35.50 in cash and stock for each May share and assume debt of $6 billion. Federated’s chief executive officer, Terry Lundgren, will be the ceo of the new company.

“Today, we have taken the first step toward combining two of the best department store companies in America, creating a new retail company with truly national scope and presence,” Lundgren said in a statement.

Federated, owner of Macy’s and Bloomingdale’s, will pay May investors $17.75 per share in cash and 0.3115 shares of Federated stock. That is equal to $35.50 per share based on the 10-day trading average of Federated stock as of last Friday, or $11 billion. The deal is expected to close in the third quarter of this year.

The boards of both companies approved the agreement on Sunday, and it still needs to be approved by regulators and shareholders.

For more see tomorrow’s WWD.