Avis Budget Group, best known for itsrental services has moved to acquire car-sharing company Zipcar for $500 million.
The companies announced the deal today, saying that Avis paid $12.25 per share for Zipcar, representing a 49 percent premium on its $8.24 closing price on December 31. Zipcar's board of directors unanimously approved the deal, and shareholders owning about 32 percent of Zipcar have already signed off.
Zipcar offers a unique service in the car business. Rather than rent out cars in the traditional way, like Avis, Zipcar offers a "sharing" service that places vehicles in cities around the world, and then allows its more than 760,000 customers to use them on an hourly or daily basis. Zipcar's 10,000 vehicles are placed in urban areas and college campuses. The idea is to limit the cost of renting a car, as well as reduce the environmental impacts of owning a car.
Zipcar has watched its revenue surge in the last several years. At the end of 2008, Zipcar generated $106 million. At the end of 2011, that figure grew to $241.7 million. Zipcar was on pace to beat that figure last year.
In a statement, Avis Budget Group chairman and CEO Ronald Nelson said that he believes Zipcar's car-sharing services are "highly complementary to traditional car rental," adding that his company plans to "apply Avis Budget's experience and efficiencies of fleet management with Zipcar's proven, customer-friendly technology to accelerate the growth of the Zipcar brand and to provide more options for Zipsters in more places."
Avis also expects to save about $50 million to $70 million through synergies in operations, maintenance, and financing.
Luckily for Zipcar users, the service isn't going anywhere. Avis confirmed today that Zipcar will operate as a subsidary of Avis Budget, and the company's current leadership will "continue to set the overall direction and run day-to-day operations of Zipcar."
Avis Budget and Zipcar expect their deal to close in the spring, pending regulatory and shareholder approval.