Avis Budget Group and Zipcar, Inc., a leading car sharing network, report that Avis Budget Group has agreed to acquire Zipcar for $12.25 per share in cash, a 49 percent premium over the closing price on December 31, 2012. This represents a total transaction value of approximately $500 million.
The transaction is subject to approval by Zipcar shareholders and other customary closing conditions, and is expected to be completed in the spring of 2013. The Boards of Directors of both companies unanimously approved the transaction, and Zipcar shareholders representing approximately 32 percent of the outstanding common stock have agreed to vote their shares in support of the transaction.
Car sharing has grown to be a nearly $400 million business in the United States and is expanding rapidly in major cities around the world, Avis reports. Zipcar has led this industry, leading in innovation and world-class service, and now has more than 760,000 members, known as Zipsters, with a market-leading presence in 20 major metropolitan areas in the United States, Canada and Europe. The fleet is also 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."
Avis Budget said it expects to generate $50 to $70 million in annual synergies as a result of the transaction.These synergies, combined with the expected growth and rising profitability of Zipcar, are expected to make the transaction accretive to Avis Budget's earnings per share in the second year following the acquisition, excluding certain items and purchase-accounting effects.