Filed under: Transportation Alternatives
Zipcar has long been the granddaddy of carsharing programs, and has spent years forming partnerships with colleges, cutting a deal with Ford and working with the Feds to become a vendor in the government’s Short Term Rental (STR) program. The company also first turned a profit in late 2011. A history like that was attractive enough to traditional car rental company Avis that Avis today announced it will buy Zipcar for $500 million. Avis is paying $12.25 per share. Zipcar’s stock closed at $8.24 on the last day of trading in 2012.
Outwardly, Avis has been slacking in the carsharing business compared to competitors Hertz (with Hertz On Demand) and Enterprise. This deal nicely dovetails an already established network of carsharing vehicles with Avis’ fleet, a combination that Tim Worstall, a contributor to Forbes, at least, thinks will be quite beneficial. His reasoning is that Zipcar will now be able to buy cars cheaper because of Avis’ discounts, turning a loss (when the vehicles are sold) into a profit. In a statement, available below, Avis and Zipcar say “Avis Budget expects to generate $50 to $70 million in annual synergies as a result of the transaction.”
Zipcar was founded in 2000 and today has more than 760,000 members. The company went public in April 2011 with shares at $18.
*UPDATE: Already, there are questions. Bernstein Liebhard LLP has just announced an investigation of the deal, wondering if Zipcar “breached its fiduciary duty to its shareholders in agreeing to sell Zipcar to Avis Budget Group, Inc.” Specifically, “The investigation is focused on the potential unfairness of the price to Zipcar shareholders and the process by which the Zipcar Board of Directors considered and approved the transaction.” Details below.