Earlier this year, Zipcar was bought for $500 million by Avis, a leader in the car rental industry. Zipcar was founded over 10 years ago, and was in control of nearly 75 percent of the car-sharing industry. Car sharing gives customers the ability to rent cars at an hourly or daily rate.
A report from Business Insider says that the strategy behind the deal was pretty obvious. About a year ago there were four leaders in the car rental industry—Avis Budget, Dollar Thrifty, Hertz Global, and Enterprise. After Avis bought Dollar Thrifty last year, the car rental industry was left with only two other companies that did both hourly and standard rentals, along with Zipcar and Avis. Now that Zipcar was bought for $500 million by Avis, that gives Zipcar investors a nice exit strategy, while leaving Avis stronger than ever.
With the acquisition of Zipcar, Avis will now surpass its direct competitors, Hertz and Enterprise.The deal is expected to be finalized in spring of this year, and it will add between $50 million and $70 million in annual synergies.