Following the acquisition, Zipcar will operate as a subsidiary of Avis Budget Group and will continu

Rental car company Avis Budget luxury car rental san diego Group, Inc. has agreed to acquire car-sharing company Zipcar for $12.25 per share in cash, a 49% premium over the closing price on 31 December luxury car rental san diego 2012, representing a total transaction value of approximately $500 million. Founded in 2000, Zipcar operates the largest member-based, car sharing network in the world.
luxury car rental san diego The transaction is subject to approval by Zipcar shareholders and other customary closing conditions, and is expected to be completed in the spring of 2013. The Boards of Directors of both companies unanimously approved the transaction, and Zipcar shareholders representing approximately 32% of the outstanding common stock have agreed to vote their shares in support of the transaction.
Car sharing has grown to be a nearly $400-million business in the United States and is expanding rapidly in major cities around the world. Zipcar now has more than 760,000 members (“Zipsters”), luxury car rental san diego with a market-leading presence in 20 major metropolitan areas in the United States, Canada and Europe, and fleet positioned at more than 300 college and university campuses.
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 luxury car rental san diego variety of consumer and commercial transportation needs.
We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable luxury car rental san diego opportunity for us as a combined company. luxury car rental san diego We expect to apply Avis Budget’s experience and efficiencies of fleet management with Zipcar’s proven, customer-friendly technology to accelerate the growth of the Zipcar brand and to provide more options for Zipsters in more places. We also expect to leverage luxury car rental san diego Zipcar’s technology to expand mobility solutions under the Avis and Budget luxury car rental san diego brands. Ronald L. Nelson, Avis Budget Group chairman and CEO
Avis Budget luxury car rental san diego expects to generate $50 to $70 million in annual synergies as a result of the transaction. In particular, Avis Budget expects significant cost reductions across the fleet life cycle (from procurement to operations and maintenance to disposition, as well as financing), in addition to savings from eliminating Zipcar’s public-company costs.
Avis Budget also plans to achieve substantial cost savings by increasing fleet utilization across the two companies. Significant revenue growth opportunities exist, including by leveraging Avis Budget’s fleet to meet more of Zipsters’ weekend demand, which is currently constrained by fleet availability.
Avis Budget expects these synergies, combined with the expected growth and rising profitability of Zipcar, to make the transaction accretive to Avis Budget’s earnings per share in the second year following the acquisition, excluding certain items and purchase-accounting luxury car rental san diego effects.
Following the acquisition, Zipcar will operate as a subsidiary of Avis Budget Group and will continue with its planned move to new headquarters in Boston, Massachusetts. Avis Budget anticipates that key members of the Zipcar management team will continue to set the overall direction and run day-to-day operations of Zipcar.
Avis Budget Group expects to fund the purchase price primarily with incremental corporate debt borrowings, as well as available cash. As of 30 September 2012, Avis Budget Group had cash and marketable securities luxury car rental san diego of approximately $554 million, and Zipcar had cash and marketable securities of approximately luxury car rental san diego $82 million, or approximately $2 per Zipcar share.
Citigroup is acting as financial advisor, and Kirkland & Ellis LLP is acting as legal counsel, to Avis Budget luxury car rental san diego Group. Morgan Stanley is acting as financial advisor, and Latham & Watkins LLP is acting as legal counsel, to Zipcar.
Separately, Avis Budget Group reiterated its previous estimates of its full-year 2012 results. Avis Budget continues to expect that its full-year 2012 revenue will be approximately $7.3 billion, a 24% increase compared to 2011, and that its 2012 Adjusted EBITDA will be approximately $825 million to $840 million, excluding certain items, luxury car rental san diego an increase of 35% to 38% compared to the prior year.
Avis Budget also continues to expect that its 2012 pretax income will be $450 million to $465 million and that its diluted earnings per share will be approximately $2.35 to $2.45, excluding certain items.
This will definitely make Zipcar membeships more attractive.  If this also helps boost utilization of Budget s fleet during off-peak periods, it will go straight to the bottom line.  More people luxury car rental san diego will go carless.  The losers are the auto makers, luxury car rental san diego dealers and finance luxury car rental san diego companies.