Car rental giant, Avis plans to buy car club start-up Zipcar for $500 million.
Currently the world’s largest car club, purchasing the company will enable traditional car rental firm, Avis to get ahead of the competition as demand for flexible, on-demand mobility grows.
Expected to pay $12.25 per share in cash for the car sharing network, Avis will acquire a company with some 760,000 members, known affectionately as Zipsters, across 20 metropolitan areas in the United States, Canada and Europe, including the UK, as well as car clubs run at 300 college and university campuses.
While there are some concerns that the buy-out could encounter US antitrust law violations, the deal is currently being reviewed by the country’s Federal Trade Commission.
If the deal is cleared, Avis plans to run Zipcar as a subsidiary of Avis Budget Group, keeping on key executives of the firm including Scott Griffith and Mark Norman, president and chief operating officer, to continue to run day-to-day operations within the car club.
Car rental king
The deal will enable Avis to overtake rivals Hertz Global and Enterprise as the largest mobility service provider, beating Hertz’s own car sharing offering, Hertz on Demand.
"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," said Ronald L. Nelson, Avis Budget Group chairman and chief executive officer.
While some fans of the Zipcar brand fear the buy-out will mean the loss of a unique, independent mobility offering, the firm’s chairman, Scott Griffith assures that the deal will enable the car sharing network to grow and improve.
Announcing the deal, Mr Griffith says: "We are delighted to announce our intention to join the Avis Budget Group family of companies, and we believe this combination is a win across the board for our members, shareholders and employees. We will be well positioned to accelerate enhancements to the Zipcar member experience with more offers and additional services as well as an expanded network of locations.
“As the leading global provider of car sharing services, with a brand that is synonymous with the category, we remain committed to the values and vision that have driven us forward for many years, grounded by our passion for delivering a superior experience to every member for every trip, every day,” he adds.
Zipcar currently operates in five towns and cities across the UK; London, Cambridge, Oxford, Maidstone and Bristol. The firm enables its members to rent cars on demand, for as little as an hour.
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