Published on January 3rd, 2013 | by Christopher DeMorro
Avis Makes A $500 Million Bid For ZipCar
Is car-sharing a trend for the future, or a flash-in-the-pan? That’s the question on a lot of minds these days as companies like ZipCar continue to grow, especially in the younger demographics. Eager to get into the game as well, rental car company Avis has put in a $491 million bid to buy ZipCar, though there are already questions regarding the legality of the sale.
As one of the largest car rental companies in the country, the acquisition of ZipCar by Avis would add literally hundreds of college campuses and hundreds of thousands of potential customers to their portfolio. ZipCar’s unique take on car rental does away with the standard business model requiring expensive real estate and rental agents.
Instead, ZipCar relies on a community of car sharers to keep up their end of the bargain, while leveraging the Internet as a means of getting customers what they want, when they want it. For many college students who can’t afford to have a car on campus, ZipCar offers an affordable degree of freedom for a weekend retreat or just a night on the town. ZipCar has even toyed with an all-electric fleet, though it remains limited in its offerings.
However, all is not settled with this sale just yet. Bernstein Liebhard LLC. is investigating whether ZipCar’s board of directors broke any laws when they agreed to sell the company to Avis. Shareholders would be paid $12.25 a share. Since going public in 2011, shares of ZipCar have fallen by more than half, and prior to the announcement of the Avis deal stocks were trading under $9.
If the Avis bid goes through, it could see a huge expansion of ZipCar beyond college campuses…and perhaps one day completely replace the standard rental car business. Or ZipCar could go the way of so many good ideas whose time had not yet come. What do you think is the more likely scenario?
Source: Autoblog Green