Seeking to expand its car rental business into the deep-value market, Avis Budget Group (NASDAQ: CAR ) announced this morning that it's acquiring the sixth largest car rental agency, Payless Car Rental, for $50 million cash.
With Avis already sporting more the 10,000 locations in 175 countries, the 120 locations in the U.S., Canada, Europe, and South America that Payless brings with it won't bulk up operations so much, but it does give it a foot into the fast-growing deep-value end of the market and differentiates its eponymous premium offerings and mid-tier Budget brand.
Payless generated $80 million in annual revenues and Avis plans to operate the business as a separate entity from a customer perspective.
Believing the transaction will generate an attractive return on its investment, Avis Budget Group Chairman and CEO Ronald L. Nelson said, "Payless expands our global footprint, enables us to support Budget's mid-tier brand positioning, and gives us greater flexibility to capitalize on opportunities in an additional segment of the car rental market in order to help accelerate our growth."
Three companies control 95% of the car rental market: Hertz, privately held Enterprise Rent-a-Car, and Avis, which also owns Zipcar, the world's leading car sharing network, with more than 790,000 members.