Thursday, January 3, 2013

Zipcar in all-cash deal to buy Avis for $500 million

Zipcar in all-cash deal to buy Avis for $500 million

Paul A. Eisenstein, the Detroit Bureau
The company car share has just a great vote of confidence by huge Avis Rent a car, get the Zipcar for $491,2 million buys.

The move is the biggest deal yet in the market in the nascent alternative to traditional car rental systems where users could search a set of wheels for travel of less than one hour. Founded in the year 2000, Zipcar is generally considered to be the leader in the field of automotive parts and now claims 760,000 members.

"By combining with Zipcar, we will significantly increase our growth potential, both in the United States and internationally and position our company to a wider range of consumer and commercial transport must be to serve better" Avis Chairman and CEO Ronald Nelson said in a statement accompanying the announcement of Wednesday morning.

The car sharing concept has begun, the rental, young and often wealthy buyers, especially in urban areas and college campuses attract to revolutionize. Last year, Ford Motor Co. has a partnership that focus placed hundreds of new Ford models on the campuses across the country, would convince an Alliance of manufacturers eventually hopes to buy the car, as soon as she graduated students.

The challenge for many new competitors in the field was to raise capital to expand, industry experts note. Zipcar has spread so far in 20 metropolitan markets in the United States, Canada and Europe.

"It is a fact of life in these places, that people want the convenience of a car but not the effort the possession of one," noted Dr. David Cole, Chairman of the Center for automotive research, or car, based in Ann Arbor, a "so, I think the car sharing concept is going to work."

The most important difference between a car-sharing service and a traditional rental is companies such as Avis Budget Group Inc. in the provision of community-based access to vehicles which can be rented by the day or week in the short term and not.

"We are targeting a generation that only knows how to buy music from the song, so a natural for them to pay for a car per hour is", said Scott Griffith, Zipcar, the Chairman and CEO, in an earlier interview.

Several leaders, including Griffith Zipcar Chairman and Chief Operating Officer Mark Norman, are expected with the company, although they will move into new headquarters in Boston.

Zipcar went in 2011 and in November said it expected end year with its first annual profit of $4 million. It was in the third quarter with a jump of 15% in revenue, which climbed million to end at $78.

Observers were the announcement, particularly with regard to the consolidation of the industry as a whole for rent not entirely surprised. Rival Hertz a takeover of Dollar Thrifty Automotive Group until last month blocked.

Avis said that it expects "Significant synergies" as part of the agreement. It could ease pressure on Zipcar on weekends and other occasions, when it fights continue a enough to satisfy a large fleet to the demand. It could be the car-sharing company that expand into other metropolitan markets.

Avis even provides a premium of 49% through December 31, 2012 closing price of $8.24 save between $50 million and $70 million through the acquisition - for which he will pay $12.25 Zipcar shares. This is still a significant reduction in the exercise price of $18 per share for Zipcar was during his April 2011 IPO.

See Avis, a number of other car-sharing services are, some are looking for still more radical approaches like RelayRides Zipcar will be confronted. This concept not only skip the traditional rent counter busy, but allows individual car owners, their cars, trucks and crossover onto the market for short term rentals.

Last summer, RelayRides has a partnership with General Motors OnStar service in a renters access a vehicle without using a connection can first establish the owner of the key.

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