Avis takes over car club firm Zipcar for $500m
Zipcar, the car club business, has been snapped up by the rental giant Avis Budget in a deal worth $500m (£300m).
Zipcar has some 760,000 members and 10,000 vehicles around the world, including a fleet of 1,500 in London, Bristol, Cambridge and Oxford. It also has local authority partnerships in Kent and Surrey.
Avis's $12.25 per share acquisition means its sale price was at a premium of almost 50 per cent higher than the shares' unaffected price on Monday night.
Avis's chief executive, Ronald Nelson, said car sharing was "highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company".
Avis expects to cut costs by $50m to $70m a year as a result of the deal, and added that "significant revenue growth opportunities exist". It plans to use Avis Budget's fleet to meet Zipcar members' demand for cars on weekends, which, it said, was "currently constrained by fleet availability".
Demand for car clubs has boomed, in part thanks to the soaring cost of petrol, plus rising rail fares. In the UK, Zipcar beefed up its presence in 2010 when it bought rival StreetCar in a deal worth £32.5m. Zipcar later ditched the Streetcar brand in the UK.
Avis's rival Enterprise Holdings, America's biggest car rental company, is also expanding aggressively in the car-sharing market.
Avis hired Citigroup for advice, and Kirkland & Ellis lawyers. Zipcar brought Morgan Stanley on board for financial advice and hired the law firm Latham & Watkins.
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