Ouro Verde takes over the property and title of Unidas to compete with Localiza and Movida
When Localiza and Unidas announced in September 2020 that they had reached an agreement to merge the operations, many people expressed concern about the effects the transaction would have on the car rental markets. After all, the operation would result in a player dominant, with about 70% of a booming segment in Brazil, if approved in the way it was presented.
The case was a challenge for the Administrative Council for Economic Defense (Cade) and resulted in one of the most protracted analyzes in the history of the antitrust body, which divided the directors. Only at the end of 2021, the operation was approved with some conditions. The main one was the sale of a good part of Unidas’ car rental area, as well as the brand, so that the market would once again have a relevant competitor in the segment.
Opposing the original terms of the merger, Ouro Verde saw in the solution provided by Cade an opportunity to add a new vertical to its business, which until then had been composed of rental and outsourcing services for cars, trucks and heavy equipment. In June, the Canadian fund Brookfield, which controls the company, closed an agreement to acquire the assets of Unidas for R$ 3.5 billion, to pass on to its rental company in Brazil.
Now, finally with the assets in hand, Ouro Verde announces a new stage in its history, changing its name to Unidas and positioning itself to compete with the new Localiza and Movida.
“Cade promoted a much greater remedy than what the General Superintendence had previously positioned”, says Cláudio Zattar, president of the company, to the NeoFeed. “From there, we looked at another perspective, because we never had a short-term car rental service, and this became a consumer dream because it turned us into a more complete platform.”
The new Unidas, which opens on the market this Monday, October 3, received 49,000 Unidas cars, 180 car rental stores across the country and 20 used car sales points. As a result, its fleet reached 90,000 assets, including trucks, machinery and heavy equipment. Its staff totals 3,600 people.
The combined revenue estimated by Unidas’ management, based on 2021 figures, is BRL 3.3 billion. The amount considers the closed values of Ouro Verde, added to those corresponding to the assets acquired from Unidas.
And according to the calculations made by the rating agency Fitch Ratings, the 49,000 vehicles can generate an Ebitda from leasing between R$450 million and R$500 million, without considering the contribution of used car operations. Last year, Ouro Verde recorded an Ebitda of R$ 447.1 million
By determination of Cade, the assets acquired from the vehicle leasing part of Unidas were separated from Localiza in July and placed within a new company, which operated autonomously between August and September under the eyes of Ouro Verde.
Zattar explains that the arrival of Unidas does not represent a merger. The company created to house the assets will operate in parallel with the operations of the then Ouro Verde, with all under the same corporate umbrella and the Unidas brand. In charge of this structure is Zattar himself, CEO of Ouro Verde since 2019.
“Accounting, we are not joining companies and accounting for a single company”, he says. “The companies will be managed accounting and financially in parallel, and there is a holding company that will encompass them and a unified management structure, with companies with separate CNPJs.”
According to him, the decision to go after Unidas’ assets came from the company itself, understanding that it was a synergistic operation, capable of helping the company to take advantage of the growth of the car rental market in the country and transform it into a one stop shop of the segment.
Data from the Brazilian Association of Car Rental Companies (Abla) show that, in 2021, the number of people who rented vehicles rose 12.3%, to 50.1 million. Compared to 2017, the growth was 84.2%. The segment’s gross revenue reached R$ 23.5 billion, an increase of 33.5% compared to 2020 and 51.6% compared to four years ago.
“The confidence gained in Ouro Verde’s business model, the way we put the business as an opportunity to capture synergies, in addition to the growth of the car rental market, motivated Brookfield to make an effort to help us and invest in this acquisition”, says.
For Zattar, the size of the new Unidas will also allow for better conditions in negotiations with automakers, considering that Unidas and Ouro Verde have many suppliers in common. “With the strength that we gain, we will have significant improvements in purchasing conditions, both for cars and trucks”, he says.
Scale is essential for any company that wants to compete in the rental car industry. Localiza ended the second quarter with a fleet of more than 500,000 vehicles, 650 rental agencies and 180 used car stores. Another large company in the sector, Movida registered a fleet of 207,000 cars in the same period, 223 car rental points and 86 used-vehicle stores.
Without opening numbers and goals, Zattar says that the plan is to invest to increase the fleet and service points across the country, while putting into practice measures to improve the operation and capture synergies.
Like competitors, it will invest in more expensive vehicles, such as sport utility vehicles (SUVs), due to customer demand for modern and cutting-edge cars and the supply of automakers, which are reducing production of so-called popular cars.
Going forward, the idea is to work on improvements in service, considered by Zattar a bottleneck in the sector, directing initiatives to reduce the bureaucracy of the rental process.
“In the short term, our concern is to guarantee its operational continuity, we are focused on this passing of the baton”, he says. “Everything is new, we are really getting to know the operation now, so this period of learning and control is important at this first moment.”