US car rental firm Avis acquires Zipcar for $500 mn

One of the world's leading car rental companies Avis Budget Group Inc has agreed to buy car share network Zipcar Inc for approximately $500 million in an all-cash deal, expanding into the growing business of car sharing services.

Under the terms of the deal, Avis will pay $12.25 per Zipcar share, representing a 49-per cent premium to its Friday's closing price on Nasdaq. Further to the news, Zipcar shares jumped 48 per cent to end at $12.18 yesterday while shares in Avis closed nearly 5 per cent higher at $20.77.

Avis chairman and CEO Ronald Nelson said, ''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.''

The companies expect to close the transaction in the spring of 2013 subject to approval by Zipcar shareholders and other customary closing conditions.

Cambridge, Massachusetts-based Zipcar, founded in 2000, is the world's leading car sharing network with more than 760,000 members and over 10,000 vehicles. It has market leading presence in 20 cities in the US, Canada Spain and Austria and fleet positioned at over 300 college and university campuses.

Car sharing business in the US is valued around $400 million. Avis sees car sharing as highly complementary to its traditional car rental business with rapid growth potential.