Localiza-Unidas: Carpooling

Publicado em 15/12/2022

In July 2022, Localiza and Unidas, two of the largest Brazilian car leasing and rent-a-car companies, finally formalized their $10 billion merger, which had been in the works since September 2020. The move strengthens Localiza’s position in a vast market that is attracting the attention of the biggest global players.

At the time the deal was announced, negotiations hinged on the approval of the shareholders at both companies, in addition to other operational conditions, however the expectation was that, given the prospects for growth post-merger, this would be secured, and so it proved.

Yet the deal was held up by Brazil’s antitrust regulator, which approved the tie-up in Q4 2021, with the proviso that the companies divest assets, including the Unidas brand. This hurdle was cleared in June when Localiza agreed to sell $715 million in assets to Canada’s Brookfield Asset Management, operators of Brazil-based rental car company Ouro Verde.

"With the merger of our complementary businesses, we foresee the creation of a worldwide corporate reference in mobility via the offering of rent-a-car services, corporate fleet management and car rental subscriptions,” stated Eugênio Mattar, the CEO of Localiza. 

Car wars
Many have viewed the deal as a necessary response by Localiza to the arrival of global giant Enterprise in the Brazilian market in 2019, with the American car rental company and other fleet operators investing heavily to gain market share in what had, until recently, been a highly fragmented market.  

Many have viewed the deal as a response to the arrival of global giant Enterprise in the Brazilian market in 2019

The Localiza-Unidas deal was Brazil’s largest M&A transaction of 2022, in a sector that, after a two-year growth spurt in 2020 and 2021, declined by more than 30% in 2022. However, this should be a mere bump in the road, as industry experts forecast growth of 6% annually for the sector over the next half decade.  

As of March 2022, Localiza's and Unidas’ had a combined fleet of 494,656 vehicles, consisting of 294,587 in rent-a-car and 197,069 in fleet management, figures which give the Belo Horizonte headquartered firm a comfortable leadership in both segments.

The merger puts the 50-year-old company in a stronger bargaining position with equipment manufacturers and allows it to better capitalize on economies of scale. By the end of 2023, Localiza's total fleet is expected to top 550,000 vehicles.

In addition to its network of almost 600 branches in Brazil, Localiza has 70 locations abroad, in Argentina, Chile, Colombia, Ecuador, Paraguay and Uruguay.