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Avis to buy Zipcar for $491M

Avis Budget Group Inc., the third-largest US rental car company, is buying car-sharing service Zipcar for $491.2 million.

Zip car goes globalEnlarge
A Zipcar is displayed during a promotion of the short term car rental company on April 14, 2011 in Times Square in New York City. (Spencer Platt/AFP/Getty Images)

Avis Budget Group Inc., the third-largest US rental car company, is buying car-sharing service Zipcar for $491.2 million, the Associated Press reported. If the deal is approved by shareholders, it will close in the spring.

"I've been somewhat dismissive of car sharing in the past but what I've come to realize is that car sharing, particularly on the scale that Zipcar has achieved and will achieve, is complementary to our traditional business," Avis' Chairman and CEO Ron Nelson said today in a conference call, according to the AP.

Avis’ competitors Enterprise Holdings Inc. and Hertz Global Holidings Inc., operate their own car-sharing services, according to the AP.

Cambridge, Mass.-based Zipcar has more than 760,000 members who’ve signed up to borrow its cars on an hourly basis, but the company has not had a profitable year since it was founded in 2000, the Wall Street Journal reported. (Depending on the company’s fourth-quarter performance, Zipcar may post its first full year of profitability in 2012.)

Nelson said that Avis expects to benefit from synergies resulting from the Zipcar acquisition, including lower fleet costs and better fleet utilization, the Wall Street Journal reported.

Typically, Zipcar has extra cars during the week and Avis has extra vehicles on the weekends, the Wall Street Journal reported.

According to the Wall Street Journal:

The deal would allow Avis to reduce the number of cars at Zipcar locations during the week, but also to use Avis's excess weekend inventory to meet Zipcar's strong weekend demand.

More from GlobalPost: Video: Following Zipcar, the green idea of car sharing goes global
 

http://www.globalpost.com/dispatch/news/regions/americas/united-states/130102/avis-buy-zipcar-491m