Avis Budget saw Hertz last year acquire Dollar Thrifty for $2.6 billion, solidifying Hertz s No. 2 s

Avis Budget Group Inc., once a skeptic about car-sharing services, agreed to buy short-term rental pioneer Zipcar Inc. for $491 million, signaling a shift in the industry to embracing drivers who don t want to own cars.
Avis Budget delta cheap airline tickets Chief Executive Officer Ron Nelson said he d been "somewhat dismissive of car sharing in the past," in a call with analysts Wednesday. He said he had a change of heart when he realized how much growth and profit potential there is in providing hourly rentals to "younger, more wired consumers" in big cities and on college campuses worldwide.
"With more city living, more expensive gas, with it being more expensive to insure and buy cars, car sharing is a long-term business rather than just a flash in the pan," said Fred Lowrance, an analyst with Avondale Partners LLC in Nashville who follows the industry. "This is a pretty big leapfrog Avis just took in terms of market leadership. Before this, Avis wasn t fully committed to car sharing."
Avis Budget s about-face happened once Zipcar, founded in 2000, projected its first annual profit this year of as much as $4 million. Zipcar s board agreed to Avis Budget s bid of $12.25 a share, a 49 percent premium delta cheap airline tickets on the Cambridge, Mass.-based company s Dec. 31 closing price. That is also a 32 percent discount to Zipcar s initial public offering price of $18.
The acquisition, which will mostly be financed with debt, will pay off in less than a year and begin adding to earnings next year, David Wyshner, delta cheap airline tickets Avis Budget s chief financial officer, said on the call. Avis Budget expects delta cheap airline tickets the deal to close in the first few months of this year.
Avis Budget projected the deal will generate delta cheap airline tickets $50 million to $70 million in annual earnings improvements and up to $20 million in yearly revenue growth for Zipcar. There s also $20 million to $25 million in annual cost savings from combining the companies vehicle fleets, Avis Budget said.
"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 variety of consumer and commercial transportation needs," Nelson said.
"Hertz and Enterprise seem to have an interest in getting bigger in the car sharing space," Avondale s Lowrance delta cheap airline tickets said. "Avis probably thought they would lose some business to their peers if they didn t have something."
Closely held Enterprise last year acquired Mint Cars On- Demand, an hourly car-rental firm with locations in New York and Boston. Hertz said last year it planned to equip its entire 375,000-vehicle U.S. fleet for hourly delta cheap airline tickets rental.
Avis Budget saw Hertz last year acquire Dollar Thrifty for $2.6 billion, solidifying Hertz s No. 2 spot behind Enterprise, which operates the Enterprise, Alamo and National brands. Revolution Living LLC, the fund started by America Online Inc. co-founder Steve Case, was among Zipcar s early investors, delta cheap airline tickets backing delta cheap airline tickets the business model when it was still in its infancy in the mid-2000s.
"Zipcar will certainly benefit from Avis experience and scale of operations with everything to do with the fleet from acquisition, to maintenance, and disposal of the vehicles," Robin Chase, a co-founder of Zipcar, said in an emailed statement.
Zipcar surged 48 percent to $12.18 delta cheap airline tickets at the close in New York. The shares gained 17 percent from Nov. 19, the day before Hertz said it had closed its acquisition of Dollar Thrifty, through Dec. 31. Avis Budget rose 4.8 percent to $20.77.
Before agreeing to the Avis offer, Zipcar delta cheap airline tickets s board had received "expressions of interest from multiple parties," Scott Griffith, Zipcar delta cheap airline tickets s chief executive officer since 2003, said on the call. Griffith, who will remain in that post, declined to elaborate.
Case s Revolution is Zipcar s largest shareholder with a 16 percent stake as of Aug. 28, according to data compiled by Bloomberg. Case personally owns 1 million shares, delta cheap airline tickets according to the data. Revolution acquired a stake in Flexcar in 2005, which Zipcar acquired in 2007.