Avis Budget Group Inc. has put together a $500 million deal to acquire Zipcar Inc. the world's leading car sharing network,
has agreed to acquire Zipcar for $12.25 per share in cash, which represents a 49 percent premium over the closing price on December 31, 2012, which brought transaction value to the half-billion dollar mark. The deal is expacted to yield savngs that will allow Zipcar to expand its carsharing business, executives from both companies said.
is subject to approval by Zipcar shareholders and other customary
closing conditions, and is expected to be completed in the spring of
2013. Directors of both companies have approved the
deal, while Zipcar shareholders representing approximately 32 percent of
the outstanding common stock have agreed to vote their shares in support
of the transaction.
Car sharing has grown to be a nearly $400 million business in the
United States and is expanding rapidly in major cities around the
world. Zipcar has led this industry, leading in innovation and
world-class service. Zipcar now has more than 760,000 members and a market-leading presence in 20 major metropolitan areas
in the United States, Canada and Europe, and fleet positioned at over
300 college and university campuses.
"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 Ronald L. Nelson, Avis Budget
Group chairman and chief executive officer.
"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 and to provide more options
for Zipsters in more places. We also expect to leverage Zipcar's
technology to expand mobility solutions under the Avis and Budget
brands," he said.
Avis Budget expects to generate $50 to $70 million in annual synergies
as a result of the transaction. In particular, Avis Budget 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. Avis Budget also plans to achieve substantial cost
savings by increasing fleet utilization across the two
companies. Significant revenue growth opportunities exist, including by
leveraging Avis Budget's fleet to meet more of Zipsters' weekend demand,
which is currently constrained by fleet availability.
These synergies, combined with the expected growth and rising
profitability of Zipcar, are expected to make the transaction accretive
to Avis Budget's earnings per share in the second year following the
acquisition, excluding certain items and purchase-accounting effects.
"We are delighted to announce our intention to join the Avis Budget
Group family of companies, and we believe this combination is a win
across the board for our members, shareholders and employees. We will
be well positioned to accelerate enhancements to the Zipcar member
experience with more offers and additional services as well as an
expanded network of locations," said Scott Griffith, chairman and chief
executive officer of Zipcar. By Joseph Szczesny