The Avis Budget Group announced this week that they have agreed to purchase car-sharing pioneer Zipcar for a reported $500 million in cash. The purchase symbolizes a new direction for Avis as the company is hoping to compete more closely with rival rental car companies Enterprise and Hertz Global.
The purchase of Zipcar was done so with younger and more urban customers in mind compared to the "traditional business or leisure travelers" according to The New York Times.
"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," Ronald L. Nelson, Avis's chief executive, said in a press statement.
Avis will pay $12.25 per share for the company, a 49 percent premium to the company's closing price on Dec. 28. The news caused shares to increase by six percent in premarket trading on New Year's Eve according to Yahoo.
Click here to see the Zipcar website.
Zipcar was founded in 2000 and has over 760,000 members, who are referred to as "Zipsters" according to their website. The company has locations near 20 metropolitan locations in the U.S., Europe, and Canada and is located near multiple college campuses as well.
The company announced in November that they expected to end the fiscal year with a profit of over $4 million, Zipcar's first annual profit according to Yahoo. The company also reported a 15 percent increase in third-quarter revenue, up to over $78 million from the same time in 2011.
Once the deal is finalized, Zipcar will function as a "subsidiary" of Avis in new headquarters in Boston according to The New York Times. Zipcar's Chief Executive Scott W. Griffith and President/CEO Mark D. Norman are expected to remain with the company.
The deal between Avis and Zipcar is expected to be finalized by April 2013.
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