The $12.25 per share cash offer represents a 49% premium over the Zipcar closing price on 31 December 2012.
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.
However, the boards of directors of both companies unanimously approved the transaction, and Zipcar shareholders representing approximately 32% of the outstanding common stock have agreed to vote their shares in support of the transaction.
Avis Budget noted that car sharing has grown to be a nearly $400m business in the US and is expanding rapidly in major cities around the world. Zipcar now has more than 760,000 members in 20 major metropolitan areas in the US, Canada and Europe.
Zipcar has combined leading-edge technology, an outstanding customer experience, and clear brand messaging to develop strong loyalty and advocacy among its customers.
Ronald L. Nelson, Avis Budget Group chairman and chief executive officer, said: “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. We expect to apply Avis Budget’s experience and efficiencies of fleet management with Zipcar’s proven, customer-friendly technology to accelerate the growth of the Zipcar brand.”
He added that he also expects to use Zipcar’s technology to expand mobility solutions under the Avis and Budget brands.
Avis Budget said in a statement that it expects to generate $50 to $70m in annual savings as a result of the transaction. In particular, the company expects “significant cost reductions” across the fleet life cycle (from procurement to operations and maintenance to disposition, as well as financing), in addition to savings from eliminating Zipcar’s public-company costs.
Following the acquisition, Zipcar will operate as a subsidiary of Avis Budget Group and will continue with its planned move to new headquarters in Boston, Massachusetts.
