Brazilian processed foods company Perdigao said that the European Commission had approved its takeover of local rival Sadia, paving the way for the creation of a multinational that will control a quarter of the world's poultry market.

Approval of the transaction by Brazilian antitrust authorities is still pending, Perdigao said in a regulatory filing. On May 19, it said it would buy Sadia in an all-stock deal valued at 1.4 billion reais ($722 million), creating a company with annual revenue of more than $10 billion.

The commission, Europe's competition authority, often requires companies with heavy trade activity in the region to request approval for mergers and takeovers. The combined company, called Brasil Foods, will be based in Sao Paulo and form the world's largest poultry exporter.

Perdigao and Sadia earned an average 22 percent of their 2008 revenues from sales of poultry, pork meat and other processed foods to Europe, according to data provided by the companies.

Brazil exported 3.6 million tonnes of chicken in 2008, according to the US Department of Agriculture. Perdigao and Sadia supplied nearly half of that, or 1.7 million tonnes.

The companies may face strict scrutiny from Brazilian antitrust regulators because of their control of certain sectors of the food industry, which could give them an advantage in terms of pricing power, analysts said last month.

Perdigao shares rose 0.2 percent to 37.58 reais in early trading, while Sadia gained 1.1 percent to 4.81 reais.