Car rental giant Avis is to buy car-sharing firm ZipCar for $491 million, the companies said Wednesday in a major boost for the fast growing car-share market.
ZipCar allows members to rent cars by the hour using computer log-ins and smartphone apps to bypass traditional rental counters and is popular in urban areas and on college campuses.
Often used for short journeys and shopping trips, the cars are conveniently parked in reserved street-side spaces in 20 major US metropolitan areas and on 300 college campuses.
The company was founded in 2000 and went public in 2011. It has 760,000 members and is estimated to hold a 75 percent share of the fast growing car-sharing market.
Avis will pay $12.25 per ZipCar share, representing a 49 percent premium on the company's closing price prior to the deal being announced.
"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," Avis Chairman and CEO Ronald Nelson said in a statement.
"We see car sharing as highly complementary to traditional car rental, with rapid growth potential."
The boards of both companies unanimously approved the transaction, which envisages ZipCar operating as a subsidiary of Avis.
Avis said it expects to generate between $50 million and $70 million annually from the deal, which will see Zipcar use Avis' fleet to meet high weekend demand.
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