Zipcar Bought For $500 Million By Avis Budget Group

Zipcar was bought for about $500 million by Avis Budget Group, Inc.

Zipcar bought for $500 million (Photo: Zipcar)

Avis is expected to pay $12.25 a share in cash, which represents a 49 per cent premium over the Zipcar's closing price on the last day of trading and with a total transaction value of approximately $500 million.

As of November 2012, Zipcar has 767,000 members, known as Zipsters, and offers 11,000 vehicles in 20 major metropolitan areas in the United States, Canada and Europe, with fleet positioned at over 300 college and university campuses.

"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 Ronald L. Nelson, Avis Budget Group chairman and chief executive officer. "We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company. We expect 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. We also expect to leverage Zipcar's technology to expand mobility solutions under the Avis and Budget brands."

With the transaction, Avis Budget expects to generate $50 to $70 million in annual synergies and significant cost reductions across the fleet life cycle, in addition to savings from eliminating Zipcar's public-company costs.

Avis Budget also plans to achieve substantial cost savings by increasing fleet utilization across the two companies. Significant revenue growth opportunities exist, including by leveraging Avis Budget's fleet to meet more of Zipsters' weekend demand, which is currently constrained by fleet availability.

"Avis Budget's existing infrastructure, scale and experience with managing multiple brands make us uniquely positioned to accelerate the growth and profitability of Zipcar," Mr. Nelson added. "At the same time, we are committed to retaining the elements of the Zipcar brand and culture that have allowed Zipcar to achieve such rapid growth and success over the last twelve years."

Following the acquisition, Zipcar will operate as a subsidiary of Avis Budget Group and will continue with its planned move to new headquarters in Boston, Massachusetts. Avis Budget anticipates that key members of the Zipcar management team, including Mr. Griffith and Mark Norman, president and chief operating officer, will continue to set the overall direction and run day-to-day operations of Zipcar.