Marca Unidas can be sold for merger with Localiza to be approved

The union of the two largest car rental companies in the country, Localiza and Unidas, runs the risk of being denied by the Cade’s Court (Administrative Council for Economic Defense).

The directors would be divided between not authorizing the merger and recommending a divestment package in the new company, according to the Sheet.

The divestment package would include the sale of the Unidas brand and a set of around 30 thousand vehicles. For interlocutors familiar with the matter, however, even if the strength of the Unidas brand were transferred to a third party, the competition issue would not be resolved.

Data from Lafis Consultoria indicate that the union would create a company with a concentration of 72% of the car rental market (RAC) in Brazil.

The rental company’s fleet is estimated at 1 million vehicles today. Of this total, around 28% belong to Localiza, 14% to Unidas and 12% to Movida – they are the only three in the market with more than 100,000 cars each. In other words, just Localiza and Unidas together already reach 42% of the fleet, or 420,000 vehicles.

The remaining 46% are divided between 15 medium-sized companies, such as Ouro Verde, with fleets ranging from 15 thousand to 50 thousand vehicles, and around 11 thousand small ones, with local operations.

The market for vehicle leasing and outsourced fleet management (when companies rent vehicles for their activities) had revenues of R$ 17.6 billion last year. Of this total, BRL 7.8 billion correspond to car rental for individuals, which includes application drivers, according to data from Abla (Brazilian Association of Car Rental Companies).

The merger of Localiza and Unidas — which, in practice, consists of the purchase of the latter for the first time — was announced in September last year, but was only presented to Cade in February of this year. Two months ago, the General Superintendence of the autarchy gave the guarantee for the companies to proceed with the deal, but the final decision rests with Cade’s Court, which, in early October, asked for an extension of the deadline to judge the case.

The verdict is not expected until early January.

When contacted, Localiza informed that, “following its recognized practices of corporate governance and transparency, it clarifies that the operation is being analyzed by the Cade’s Court. Any clarifications will be presented directly to the autarchy and its advisers”.

The Unidas also did not want to manifest itself. Through his press office, he informed that “it will continue providing all the necessary support and clarifications directly to the body and will await Cade’s final decision, to which any clarifications and doubts related to the subject can be forwarded”.