The deal illustrates the rapid growth and maturity of the car-sharingÂ phenomenon as established car rental firms eye a growing and popular marketplace and see it as a natural bolt-on to existing services.
Acquiring the company is subject to Zipcar shareholder approval and expected to close in the next few months.
The service currently has around 750,000 members (called Zipsters) and operates in 20 major cities in the US, Canada and Europe. It is also especially strong in student communities, with fleets in over 300 campuses.
There will be some level of integration between the two brands, Avis Budget says in a statement – introducing its “fleet management experience” to car-sharing and extend Zipcar’s “mobility solutions” to the Avis and Budget rental services.
Zipcar joined the public markets with its own IPO in April 2011, howeverÂ its share price has fallen by 60% over the course of the last year.
Avis Budget has paid $12.25 per share in cash, a 49% premium over the closing price for Zipcar at the end of trading in 2012. The new owner expects to generate between $50 million and $70 million in cost savings as a result of the deal.
This will come mainly in the form of fleet life cycle efficiency across the group as well as eliminating costs associated with Zipcar’s status as a public company.
The company will proceed with its planned transfer to a new headquarters to Boston, Massachusetts, and Scott Griffith (chairman and CEO) and Mark Norman (president and COO) will continue to run operations.
Avis Budget Group CEO and chairman, Ronald Nelson, says:
“By combining with Zipcar, we will significantly increase our growth potential, both in the US and internationally, and will position our company to better serve a greater variety of consumer and commercial transportation needs.
“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.”
The move is not entirely unexpected, with rumours circulating in recent weeks that a deal to see a car rental giant such as Avis Budget throw itself in to the car-sharing marketplace.
Ground transportation in general has been tipped as the next battleground in travel distributionÂ as established players look to seize on the growing acceptance and enthusiasm for the sharing phenomenon with consumers.