Avis rental car company will acquire the car-share company Zipcar for $500 million, the companies announced today.
Zipcar, which went public in April 2011, has been a standard-bearer for the sharing economy fueled by Internet technology, and the announced deal caused Avis to rise up among trending topics on Twitter.
Car-sharing is now a $400-million business in the United States, according to Zipcar. The company faces expanding competition from newcomers such as Relay Rides, which allows individual car owners to lease their vehicles out when they’re not using them. (Zipcar manages its own fleets.) Recently, mobile apps like SideCar and Lyft allow drivers and riders to coordinate ride-sharing.
Other industries have adopted similar approaches — most notably, Airbnb has upended the hotel industry by allowing locals to rent out their own apartments for a few days at a time.
In a sign that sharing has been elevated from the DYI economy to the corporate boardroom, Avis CEO Ronald Nelson said that his company saw “car sharing as highly complementary to traditional car rental.”
“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,” Scott Griffith, chairman and chief executive officer of Zipcar, said in a statement.
If the deal is approved, Zipcar will operate as a subsidiary of Avis Budget Group with Griffith staying on as CEO.
The proposed acquisition comes to $12.25 per share, nearly a 50 percent premium on Zipcar’s closing stock price in December 31 but less than the company’s 52-week high of $16.25 a share.
Zipcar shareholders will have to approve the deal. Shareholders accounting for just under a third of Zipcar’s common stock have already pledged to support the deal, but a securities litigation firm is already looking into suing Zipcar on behalf of its shareholders for failing to secure a better price.