Avis buys Zipcar, joins the 'sharing economy'
The Avis-Zipcar deal is raising eyebrows.
The sharing economy—if anyone had any lingering doubts— definitely has wheels. Car rental giant Avis announced today that it is buying the vehicle-sharing company Zipcar for $491.2 million, expanding its offerings from car rentals to car sharing.
Zipcar has deep roots in Portland and the acquisition by Avis caused some to wonder how the deal would impact car sharing.
Zipcar (Nasdaq: ZIP), which was founded in 2000 in Cambridge, Massachussets, went public in 2011. Avis Budget Group (Nasdaq: CAR) will pay $12.25 per share, 49 percent premium above Zipcar’s closing price on Friday, a move that put the total value of the deal at approximately $500 million. The transaction, which still needs approval from Zipcar shareholders, is expected to close in the spring, although it could face some legal resistance from shareholders. A securities litigation firm announced this morning that it is investigating the deal and said that the stock may be undervalued, since it reached a higher price-per-share earlier this year, TechCrunch reports.
With more than 760,000 members, Zipcar is the global leader in a car-sharing industry that Avis says totals nearly $400 million in the United States.
“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," Ronald Nelson, Avis Budget Group chairman and chief executive officer said in a statement. "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.”
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