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PARSIPPANY, N.J., Aug. 12, 2013 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (Nasdaq:CAR) announced today that is has agreed to acquire a 50% ownership stake in its existing Brazilian licensee. This investment of approximately $50 million will enable the Company to significantly increase the presence of its Avis and Budget brands in the fast-growing Brazilian car rental market, and to capture a larger share of Brazil's domestic, international-inbound and international-outbound vehicle rental spend.
"Expanding our global footprint and increasing our presence in faster-growing markets are two of our key strategic growth initiatives, and investing in South America's largest economy is consistent with these goals," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer.
Avis has operated in Brazil since 1978. The Company's licensee in Brazil has operated the Avis brand there since 2003 and the Budget brand since 2005, and generated rental revenues of approximately $50 million in 2012. Avis and Budget provide vehicle leasing and vehicle rental services with a fleet of more than 4,000 cars in Brazil, and operate more than 40 rental locations, including at Congonhas and Guarulhos airports in Sao Paulo, at Santos Dumont and Galeão airports in Rio de Janiero, at other airports and off-airport in major metropolitan markets.
"This investment will enable us to substantially expand our Brazilian fleet and capture a larger share of this rapidly expanding car rental market," said Patric Siniscalchi, Avis Budget Group President, Latin America/Asia Pacific. "In addition, by seizing the opportunity now to increase our presence in this market, we will be able to leverage our licensee's established presence and substantially increase the awareness and visibility of our brands."
The Brazilian car rental market is expected to reach $4 billion in annual revenue by 2016, representing a 13% compound annual growth rate since 2008. Going forward, growth is expected to be driven by increases in both domestic and international tourism, including the 2014 FIFA World Cup and the 2016 Olympic Games, growth in business travel spending, improvements in airport infrastructure and improved access to long-term financing. In addition, total business travel spending in Brazil is expected to grow at more than 10% per year, with international-outbound business travel spending growing 20% in 2013 alone, according to the Global Business Travel Association.