Global vehicle rental giant
Avis Budget Group Inc.
) has successfully completed the waiting period under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976 for its
pending acquisition of the world's leading car sharing network
), on Feb 11, 2013.
Following this, the conclusion of the deal is dependent on the
approval by Zipcar shareholders and review by UK authorities. The
company now expects to complete the deal in March or April this
Avis had agreed to buy Zipcar in Jan 2013 for a total worth of
$500 million. This strategic move will facilitate the company in
expanding its offerings from car rental to car sharing and
compete with rivals
United Rentals Inc.
Hertz Global Holdings Inc.
), which has its own car sharing service, Hertz On Demand.
To finance this deal, Avis Budget will opt for corporate
borrowings and use its available cash. At the end of Sept 30,
2012, this Zacks Rank #3 (Hold) stock had cash and marketable
securities of nearly $554 million.
Avis Budget believes that the transaction will generate an annual
synergy in the range of $50-$70 million. Further, we believe that
the acquisition will lead to increasing revenues and reduce costs
by augmenting fleet utilization.
In the United States alone, car sharing is currently a lucrative
business worth nearly $400 million and it is growing rapidly in
other parts of the world. With over 760,000 members, Zipcar has
presence in 20 major cities of U.S., Canada and Europe.
We believe that by capitalizing on Zipcar's strong network
along with its leading-edge technology, Avis Budget will
definitely be able to boost its top and bottom lines.
AVIS BUDGET GRP (CAR): Free Stock Analysis
HERTZ GLBL HLDG (HTZ): Free Stock Analysis
UTD RENTALS INC (URI): Free Stock Analysis
ZIPCAR INC (ZIP): Free Stock Analysis Report
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Zipcar is engaged in operating car sharing network, providing
self-service vehicles to members located in reserved parking
spaces throughout the neighborhoods where they live and work. The
company's vehicles are available for use through its reservation
system accessible by phone, internet or wireless mobile devices.
Avis Budget will today release its financial results for fiscal
2012. The company had earlier forecasted revenue of approximately
$7.3 billion and earnings in the range of $2.35-$2.45 per share
for fiscal 2012. The Zacks Consensus Estimate for fiscal 2012
stands at $2.41 per share, which is within the company's
projected guidance range.