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A Zipcar is displayed during a promotion of the brief term car rental company on April 14, two thousand eleven in Fresh York Citty
A Zipcar is displayed during a promotion of the brief term car rental company on April 14, two thousand eleven in Times Square in Fresh York City. US car rental giant Avis announced plans Wednesday to buy the popular auto-sharing service Zipcar in a deal valued at $500 million
US car rental giant Avis announced plans Wednesday to buy the popular auto-sharing service Zipcar in a deal valued at $500 million.
The budge gives Avis an entry into the growing market for car-sharing with the company which offers rentals on an hourly basis by providing customers a clever card to unlock vehicles on a self-serve basis.
Avis Budget Group agreed to pay $12.25 per share in cash, a forty nine percent premium over the Zipcar closing price on Monday. The transaction is subject to approval by Zipcar shareholders and other conditions, and is expected to be finished in the next few months.
The companies said car-sharing has grown to be a $400 million business in the United States and is expanding rapidly around the world.
Zipcar has more than 760,000 members, known as Zipsters, and is the sector leader in twenty metropolitan areas in the United States, Canada and Europe. It also has cars at over three hundred 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 multiplicity of consumer and commercial transportation needs,” said Ronald Nelson, Avis chairman and chief executive.
“We see car sharing as very complementary to traditional car rental, with rapid growth potential and signifying a scalable chance for us as a combined company.”
Nelson said the deal will permit the Zipcar brand to expand and benefit from Avis’s cost advantage in fleet purchases, permitting $50 to $70 million in annual savings.
Avis said it also can use some of its fleet to meet Zipcar weekend rentals, when request is highest for hourly rentals.
Scott Griffith, chairman and chief executive of Zipcar, said “we believe this combination is a win across the board for our members, shareholders and employees. We will be well placed to accelerate enhancements to the Zipcar member practice with more offers and extra services as well as an expanded network of locations.”
Zipcar in two thousand ten filed for a $75 million initial public suggesting to help pay off its debts and fuel expansion.
The Cambridge, Massachusetts-based Zipcar was founded in two thousand and has a fleet over more than Ten,000 cars. Zipcar acquired rival Flexcar in two thousand seven and Britain’s Streetcar in 2010.