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Rivals dispute merger between Localiza and Unidas

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Four competitors promised to work together to fight back the potential merger of rental car companies Unidas and Localiza, announced in September 2020. If approved, the union would create a giant with market capitalization of more than R$58 billion. The proposed deal is currently under evaluation by antitrust regulator Cade.News about the dispute moved the stock market on Monday leading stocks of Unidas and Localiza to be among the ones with biggest loses at B3. The companies fell 8% and 7%, respectively.

Pushing against the deal are Movida, Fleetzil (owned by Volkswagen), Ouro Verde and Ald Automotive, subsidiary of French group Société Générale in the segment of outsourcing and fleet management.

They filed request on Friday to participate in the process as interested third-party and, if accepted, they will have the right to challenge the deal at Cade's court, if approved with no restrictions by the entity's general superintendence.

Movida, the third-largest car rental company in Brazil, says the deal must be rejected because it would create problems difficult to be solved. "There is no reason to approve the deal, which creates excessive asymmetry in a market where, currently, competition has been working well," the company says.

In the document sent to Cade, Movida points out divergences on market data provided by Localiza to investors and the antitrust body. In the company's reference form, dated September 15, 2020, Localiza claims to have a 51.1% market share in the car rental market, based on data from ABLA (Brazilian Association of Car Rental Companies). In the document to justify the deal with Cade, the company said it had between 20% to 30% of the market.

Movida also said that Unidas itself, in its most recent reference form, said that the three largest companies in the sector (Localiza, Unidas and Movida) had around 84.6% of the market's car rental fleet in 2019. "It borders bad faith to state that the estimated joint participation of Localiza and Unidas in [rental car market] would be only 30 to 40%," Movida said.

Localiza said that it presented Cade with all the necessary information about the deal. When asked about the divergence in numbers...

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