Avis Budget Group (NASDAQ: CAR ) announced today it has entered into an agreement to buy car-sharing network Zipcar (NASDAQ: ZIP ) for $12.25 per share, a 49% premium over Zipcar's closing stock price Dec. 31. The all-cash transaction values Zipcar at approximately $500 million.
Zipcar shareholders owning approximately 32% of existing Zipcar stock, along with the boards of directors of both companies, have agreed to the proposed deal, according to the companies. The agreement must still go to all Zipcar shareholders and meet customary closing conditions. The deal is expected to close in the spring.
Ronald Nelson, CEO and chairman of Avis Budget Group, was quoted in the press release as saying: "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."
According to the announcement, the combined companies are expected to generate approximately $50 million to $70 million in cost savings annually. Zipcar has "more than 760,000 members, known as Zipsters, with 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," according to the companies. It has more than 10,000 vehicles. Through its Avis and Budget brands, Avis Budget Group has 10,000 rental locations in approximately 175 countries.
The companies said they intend for key members of the Zipcar management team to continue to "set the overall direction and run day-to-day operations of Zipcar" after the acquisition.