Localiza, Unidas get green light in Brazil to become one
Localiza and Unidas, Brazil’s largest and second largest vehicle leasing and car rental agencies respectively, will officially become a single company on Friday (1 July).
This is according to local watchdog Cade which last week approved a deal by Localiza and Unidas to sell 49,000 vehicles to Canadian asset management company Brookfield for 3.57 billion reais (US$677 million).
Equivalent to an average of US$13,939 per vehicle, the shedding of these assets was a condition to approve the merger of Localiza and Unidas announced in December. Brookfield is the owner of Brazilian vehicle leasing and rental agency Ouro Verde which now has a fleet of approximately 87,000 vehicles.
"Localiza is a very cost-conscious company that knows the Brazilian market well, and it will be aggressive with trying to get discounts from auto manufacturers. Although the new Localiza led group will take a firm lead in the market, we can certainly expect some arm wrestling among the top players, local and regional experts told Fleet Latam during the evaluation phase of Cade.
"As local player Movida will be holding the No. 2 spot, it will remain well positioned. Overall, remember that healthy competition is needed to maintain favorable pricing in the market," they added. See more here.
Localiza headquarters in Minas Gerais state capital Belo Horizonte (courtesy of Localiza)
On Monday (4 July), Localiza's new shares will begin trading on the Sao Paulo stock exchange B3. Following the announcement, Localiza (RENT3) stock rose 2.72% to 51.68 reais on the Sao Paulo stock exchange B3 on Monday (27 June) all while Unidas (LCAM3) stock rose 2.17% to 23.50 reais.
The Localiza and Unidas group now has approximately 450,000 vehicles, according to a company release. It is the largest fleet of its kind in Latin America.
These activities are certainly under the microscope of local competitor Movida, to be ranked second in the country with some 192,000 vehicles, not to mention multinationals ALD Automotive and Arval as well as local players Ouro Verde and LM Frotas which are among the top players in Brazil.
Both Localiza and Unidas are headquartered in Belo Horizonte, one of the most favorable states in Brazil to open a vehicle leasing or car rental agency owing to lower tax rates on vehicle owners and operators.
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Top photo: Localiza CEO Bruno Lasansky (left) and Unidas CEO Luis Porto (right)