Cade’s commissioners voted 4-2 in favour of the tie-up under an agreement, negotiated between the companies and global antitrust agencies, that included the sale of several of Bayer’s assets to BASF.

Approval of the transaction in Brazil, a powerhouse producer of grains and other agricultural commodities, clears a crucial hurdle for the deal, which the companies initially aimed to have approved by the end of 2017.

The transaction, valued at US$66 billion when announced in September 2016, would create the world’s largest seeds and pesticides company. The value of the deal has since been revised to $63.5 billion as Monsanto reduced its debt load.

The companies are waiting for approval of the deal in jurisdictions including the European Union and the U.S., where final rulings are still pending.

In Brazil, the transaction faced fierce opposition from soy and cotton growers as well as seed producers who thought it would give the combining companies excessive market power.

Rachel Mendonca, an attorney who represented three associations against the deal, highlighted Cade’s imposition of limits on licensing and sales practices by the new company, but conceded she had lost the argument for more asset sales in Brazil.

Earlier this week, Bayer said in a statement it had proposed solutions to allay antitrust concerns in the EU. Bayer had agreed to sell seed and herbicide businesses to BASF for 5.9 billion euros (C$9.03 billion). It emerged this week the offer would also involve divestments of vegetable seeds business in some EU countries, a source familiar with the matter said.

Most of Cade’s board said those measures would be enough to address antitrust concerns laid out by its technical staff in October, when it recommended the deal be blocked or approved with conditions.

— Reporting for Reuters by Bruno Federowski and Leonardo Goy; additional reporting by Ana Mano in Sao Paulo.

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A JBS representative said Pilgrim’s Pride is not for sale. An emailed request for comments from Cargill went unanswered.

The report did not cite how it obtained the information.

JBS, the world’s largest meatpacker, purchased a controlling stake in Pilgrim’s Pride in 2009 for $2.8 billion, backed by a $2 billion loan from state development bank BNDES.

JBS is now rushing to sell assets and raise cash in order to help its holding company, J&F Investimentos SA, pay a big fine after becoming embroiled in sweeping graft probes that ensnared politicians and executives.

JBS said last month that its majority stake in Pilgrim’s Pride Corp is not for sale because it was critical to its long-term strategy of pursuing business opportunities that reduce volatility and enhance margins.

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“We will fight for this market!” said the minister, billionaire soy baron Blairo Maggi, in a message posted to social networks late on Thursday. He said corrective steps were already being taken to address the U.S. safety concerns.

The U.S. Department of Agriculture’s ban dealt a setback to Brazil’s recently opened fresh beef trade with the United States and was another black eye after recent industry scandals.

Still, the ban did not affect the bulk of Brazilian beef imports, which are processed.

USDA cleared U.S. consumption of fresh beef from Brazil last year and it still represents just one per cent of the industry’s exports, according to Antonio Camardelli, head of the Brazilian meat exporters association Abiec.

Camardelli said there were problems with hidden abscesses in exported Brazilian meat caused by allergic reactions in cattle to a vaccine against foot-and-mouth disease. Meatpackers are now chopping beef into smaller cuts to be sure they catch such irregularities, he added.

But Camardelli said the setback hurt hopes of USDA’s earlier approval opening the door to bigger fresh beef importers such as Japan and South Korea.

“If you look at the financial aspect, it’s important for the country, but the bigger damage is to our image,” he said. “We worked a long time to open the U.S. market, because it’s a passport to other markets.”

Camardelli said about 120 containers containing about 3,000 tonnes of Brazilian meat headed to the U.S. market are currently at sea.

Brazilian Finance Minister Henrique Meirelles said on Friday he expects the U.S. to lift the ban soon.

Since March, USDA has rejected 11 per cent of Brazilian fresh beef products, compared to the rejection rate of one per cent for shipments from the rest of the world. The shipments, totaling about 1.9 million lbs., raised concerns about public health, animal health and sanitation, USDA said.

Canada has rejected six shipments of Brazilian beef out of 191 meat shipments since April 10, according to the Canadian Food Inspection Agency. The agency said it recently blocked imports from one JBS SA plant in Brazil that did not meet food safety requirements, but is accepting meat from plants that meet its standards.

Three months ago, Brazilian meatpackers were hit with a scandal involving alleged bribery of health officials, which briefly shut Brazil’s protein exports out of major global markets from China to Europe.

Shares of JBS, the world’s largest meatpacker, and local rival Marfrig Global Foods SA both fell about one per cent in early trading in Sao Paulo.

Marfrig said beef exports from Brazil to the U.S. market have contributed less than one per cent of its revenue this year.

JBS declined to comment on the matter.

Rival Minerva SA, whose shares were flat, said it would ship fresh beef to the U.S. market from Uruguay rather than Brazil, adding that the change would not affect its export volumes.

— Reporting for Reuters by Roberto Samora and Bruno Federowski in Sao Paulo; additional reporting by Thaís Freita in Sao Paulo, Pedro Fonseca in Rio de Janeiro, Rod Nickel in Winnipeg and Tom Polansek in Chicago; writing by Brad Haynes.

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