Avis Budget Group sealed a deal to buy U.S. car-sharing company Zipcar for $491 million.
The move allows Avis to target consumers looking for an alternative to owning their own car. Zipcar’s board agreed to a bid of $12.25 a share, Avis Budget today said in a statement. The offer is 49 percent higher than Zipcar’s December 31 closing price. Holders of 32 percent of Zipcar’s shares have accepted the offer.
“By combining with Zipcar, we will significantly increase our growth potential, both in the U.S. and internationally, and will position our company to better serve a greater variety of consumer and commercial transportation needs,” Ronald L. Nelson, Avis Budget chief executive officer, said in the statement.
The transaction marks a change of strategy for Avis Budgest to shorter-term rental offerings following last year’s failure to buy competitor Dollar Thrifty Automotive Group. Avis Budget expects the deal to generate earnings improvements of $50 million to $70 million a year through savings on procuring and managing vehicles.
According to a forecast of Avis Budget, the purchase will add to earnings in the second year after completion, expected in the first few months of 2013. Founded in 2000, Zipcar has more than 760,000 members and is active in 20 cities in the U.S., Canada and Europe.