Deal will help car sharing firm meet high demand on weekends, Avis said
PARSIPPANY, N.J.—Avis is buying Zipcar for $491.2-million, expanding its offerings from traditional car rentals to car sharing services.
Car sharing has become a popular alternative to traditional rentals in metropolitan areas and on college campuses, allowing members to quickly procure a vehicle for quick trips.
Zipcar, which was founded in 2000, has more than 760,000 members.
It went public in 2011.
“By combining with Zipcar, we will significantly increase our growth potential, both in the United States and internationally, and will position our company to better serve a greater variety of consumer and commercial transportation needs,” said Avis chairman and CEO Ronald Nelson.
Bringing the Avis fleet into play will also help Zipcar meet high demand on weekends, Avis said, when most people make a run to the grocery store or run other errands.
Avis Budget Group Inc. will pay $12.25 per share, which is a 49 per cent premium to Zipcar’s Dec. 28 closing price.
The companies put the total value of the deal at approximately $500-million.
Zipcar Inc. has about 40.1 million outstanding shares, according to FactSet.
It will become an Avis subsidiary and have headquarters in Boston.
The boards of both companies unanimously approved the buyout.
Avis anticipates $50- to $70-million in annual savings.
The Parsippany, N.J., company also expects the acquisition will add to its adjusted earnings per share in the second year after it is complete.
Avis said that it expects certain members of Zipcar management, including chairman and CEO Scott Griffith and president and chief operating officer Mark Norman, to help run its day-to-day operations.
If Zipcar shareholders approve the deal, it’s expected to close in the spring.