UPDATE 3-Brazil blocks fuel distributor Ale takeover by Ultrapar

(Adds Cade final decision, context)

BRASILIA, Aug 2 (Reuters) - Brazil's antitrust watchdog Cade voted unanimously on Wednesday to reject Ultrapar Participações SA's proposed acquisition of rival fuel distribution company Alesat Combustíveis SA.

All 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.

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.

This is the second deal blocked by the Brazilian antitrust watchdog over the last months. Cade rejected on June 28 Kroton Educacional SA's proposed takeover of rival college operator Estácio Participações SA.

Ultrapar shares accelerated their fall and were down 2.6 percent at 72.85 reais on Wednesday afternoon in São Paulo, paring back this year's gains to 8 percent. ($1 = 3.1201 reais) (Reporting by Leonardo Goy; Writing by Tatiana Bautzer; Editing by Bernadette Baum and Matthew Lewis)