CAR-SHARING company Zipcar was yesterday bought by rental giant Avis Budget for $500m (£307m), handing the established company the leading position in the fast-growing car club business.
Zipcar offers an alternative to car ownership by allowing its members to use thousands of vehicles in cities across the world, with usage charged on an hourly basis. But despite enormous user growth since its launch in 2000, the company has struggled to turn a regular profit.
“We see car sharing as highly complementary to traditional car rental, with rapid growth potential,” said Ronald L. Nelson, Avis Budget Group chairman and chief executive.
Nelson said the Zipcar brand would retain its separate identity but around $50-70m of annual costs could be cut by utilising Avis Budget’s experience of buying large fleets of vehicles.
Yesterday’s offer of $12.25 a share in cash represents a 49 per cent premium over US-listed Zipcar’s last closing price. A third of Zipcar shareholders have already said they will back the deal, despite it being well below 2011’s IPO price of $18.
Scott Griffith, chairman and chief executive of Zipcar, will continue to run the business and if the deal receives shareholder approval it could be completed by the spring.
AOL founder Steve Case, whose Revolution fund took an early stake in Zipcar, could walk away with $96m as a result of the purchase.