(Adds details, analyst comment, shares reaction)
SAO PAULO, June 3 (Reuters) - Brazil's Localiza Rent a Car SA said on Friday it was in talks to sell about 3.5 billion reais ($730 million) of assets to an investment fund managed by Brookfield Asset Management Inc.
Asset sales are a requirement of Localiza's tie-up agreement with rival Unidas, formally known as Companhia de Locacao das Americas.
Brazil's antitrust regulator approved the tie-up late in 2021, but demanded the companies divest assets including the Unidas brand to avoid dominating the market.
Canada's Brookfield controls Brazilian rental car company Ouro Verde, which said in a securities filing the talks involved assets in the rent-a-car and used vehicle businesses to be divested from Unidas.
The potential deal was first reported by Bloomberg News late on Thursday.
"As it is a competitive process, the companies are also negotiating with other interested parties. Up to this date, there is no binding document signed with any of the interested parties," Localiza said in a separate filing.
Analysts at Guide Investimentos said the potential deal would be a strong cash-generating move for Localiza and an additional step towards its merger with Unidas, but also reinforce competition as it would strengthen Ouro Verde.
Ouro Verde "might become a threat to Localiza," Guide said, noting the company had plenty of capital after a $60 million investment from Brookfield recently.
Shares in Localiza were down 0.7% at 55.89 reais in early trading in Sao Paulo, in line with the broader Bovespa stock index, while Unidas shares were trading near flat.
($1 = 4.7965 reais)