Avis announced Wednesday morning that it plans to acquire Zipcar, the car sharing network, for $500 million, or $12.25 per share.
"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," Ronald L. Nelson, Avis Budget Group chairman and chief executive officer said. "We see car sharing as highly complementary to traditional car rental, with rapid growth potential and representing a scalable opportunity for us as a combined company."
Even though the proposed deal is a 49% premium over Zipcar's current stock price, at least one firm has already threatened to file a lawsuit against the transaction. The law firm Powers Taylor and a former attorney with the U.S. Securities and Exchange Commission think that the $500 million deal could undervalue Zipcar's stock, if its 52-week high is taken into consideration.
"Due to the proposed sale price, the size of the deal and other factors, we believe this transaction may undervalue Zipcar's stock," said Briscoe in a statement. "Our proposed lawsuit will seek to obtain the highest share price for all shareholders."
Zipcar will eventually become a subsidiary of Avis and the current exec team is expected to remain in place for the foreseeable future. Have you used Zipcar before? What are your thoughts about it becoming part of a much larger firm?