Avis Set to Complete Zipcar Buyout - Analyst Blog
14 February 2013 - 12:16AM
Zacks
Global vehicle rental giant Avis Budget Group
Inc. (CAR) 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 company, Zipcar Inc. (ZIP), 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
year.
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. (URI) and
Hertz Global Holdings Inc. (HTZ), 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.
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.
AVIS BUDGET GRP (CAR): Free Stock Analysis Report
HERTZ GLBL HLDG (HTZ): Free Stock Analysis Report
UTD RENTALS INC (URI): Free Stock Analysis Report
ZIPCAR INC (ZIP): Free Stock Analysis Report
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