(Adds details on voting by majority of Cade to reject deal, updates Ultrapar share price)
BRASILIA, Aug 2 (Reuters) - The majority of councilors at Brazil's antitrust watchdog Cade on Wednesday voted to reject Ultrapar Participações SA's proposed acquisition of rival fuel distribution company Alesat Combustíveis.
Five of the seven Cade councilors voted to block the deal. The rapporteur of the case, João Resende, had said Ale, as the company is known, did not agree to a proposal to sell assets in 12 states to obtain the approval.
The asset sale would represent divestiture of 65 percent of the company's revenue, Resende said in his vote. The session to discuss the deal is ongoing.
Ultrapar's fuel distribution unit, Ipiranga, announced its proposed acquisition of Ale for 2.17 billion reais ($696 million) in June. Ipiranga is the second-largest fuel distributor in Brazil.
Ultrapar shares accelerated their fall and were down 3.3 percent at 72.47 reais early on Wednesday afternoon in São Paulo, paring back this year's gains to 7.3 percent. ($1 = 3.1201 reais) (Reporting by Leonardo Goy; Writing by Tatiana Bautzer; Editing by Bernadette Baum and Matthew Lewis)