SAO PAULO (Reuters) - Shares in Brazilian rental car firm Cia de Locação das Américas (LCAM3.SA) rose 10 percent on Thursday after the company announced a tie-up with rival Unidas SA to create Brazil’s second-largest car rental company.
Shares in Locamerica, as the company is known, traded at 18.85 reais, extending this year’s gains to 225 percent, compared to a 27 percent rise for the benchmark Ibovespa index.
In a conference call with analysts, Locamerica executives said the cash and stock deal valued Unidas at 2 billion reais ($605 million), including debt. The combined company will have an enterprise value of 4.3 billion reais, Locamerica said.
Unidas is a franchisee of Enterprise Holdings Inc [ERACR.UL], the U.S.-based company that owns the largest U.S. car rental fleet via brands such as Alamo, Enterprise and National.
After the deal concludes, the new Locamerica-Unidas will have a fleet of more than 100,000 vehicles and 234 rental car stores in Latin America’s largest economy.
The deal, which is subject to antitrust approval, may help Locamerica face competition in a segment dominated by larger rivals Localiza Rent a Car SA (RENT3.SA) and Movida Participações SA (MOVI3.SA).
Under the terms of the agreement, Locamerica will acquire a 40.3 percent stake in Unidas for 398.6 million reais ($120.7 million) from buyout funds Vinci Partners Investimentos Ltda, Kinea Private Equity Investimentos SA (KNIP11.SA) and Gavea Investimentos Ltda, which are cashing out on their investment.
Investor Fitpart Capital Partners Ltd will acquire 9.4 percent of Unidas for 92.9 million reais.
The remaining 51.3 percent of Unidas shares will be converted into new shares equivalent to 29.9 percent of Locamerica’s capital, the filing said. Each remaining Unidas share will be swapped for 1.059096 Locamerica share.
Unidas shareholders Principal Gestão de Activos e Consultoria Administrativa e Financeira SA and Enterprise Holdings Brazil LLC will join the controlling bloc of the resulting company.
Unidas had attempted to hold an initial public offering earlier this year but called off the transaction due to weak investor demand.
Reporting by Bruno Federowski and Tatiana Bautzer; Editing by Bernadette Baum and Rosalba O'Brien