Avis Budget Group is to buy smaller rival Zipcar for US$500 million in cash. The move will allow Avis Budget to enter the fast-growing US car-sharing market. The offer of $12.25 per share is at a premium of 49% on the Zipcar share price at the close of trading on Monday.
“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,” said Ronald Nelson, Avis’s Chief Executive.
Rising petrol prices have driven demand for car sharing, attracting car rental companies in the USA. However, Zipcar has struggled to grow its presence in smaller cities to counter the threat of a saturating market in bigger cities.
The deal is expected to close in spring 2013.