Zipcar Chief Technology Officer Luke Schneider. File.(Photo: Jefferson Graham, USA TODAY)
PARSIPPANY, N.J. -- Avis is buying Zipcar for $491.2 million,
expanding its offerings from traditional car rental to car sharing.
sharing has become a popular alternative to rental in metropolitan
areas and on college campuses, allowing members to quickly procure a
vehicle. Zipcar, founded in 2000, has more than 760,000 members. It went
public in 2011.
"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 Avis
Chairman and CEO Ronald Nelson.
Bringing the Avis fleet into play
will also help Zipcar meet high demand on weekends, Avis said, when many
people go to the grocery store or run other errands.
Group will pay $12.25 per share for Zipcar, a 49% premium to Zipcar's
Friday closing price. The companies put the total value of the deal at
approximately $500 million.
Zipcar has about 40.1 million
outstanding shares, according to FactSet. It will become an Avis
subsidiary and have headquarters in Boston. Shares jumped more than 47%
in premarket trading Monday.
The boards of both companies unanimously approved the buyout.
anticipates $50 million to $70 million in annual savings. The
Parsippany, N.J. company also expects the acquisition will add to its
adjusted earnings per share in the second year.
Avis said it
expects certain members of Zipcar management, including Chairman and CEO
Scott Griffith and President and Chief Operating Officer Mark Norman,
to help run its day-to-day operations.
If Zipcar shareholders approve the deal, it's expected to close in the spring.
also maintained its 2012 adjusted earnings forecast Monday of about
$2.35 to $2.45 per share on revenue of approximately $7.3 billion.
Analysts predict earnings of $2.42 per share on revenue of $7.3 billion.