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Last Update: 02-Jan-13 07:45 ET
ZipCar shares soar 48% following news it will be acquired by Avis (CAR) for $12.25/share
Avis (CAR $19.82 +0.00) agreed to acquire Zip Car (ZIP $12.20 +3.94) for $12.25/share in cash, a 49% premium over the closing price on December 31, 2012, representing a total transaction value of approximately $500 mln. The transaction is subject to approval by Zipcar shareholders and other customary closing conditions, and is expected to be completed in the spring of 2013. The Boards of Directors of both companies unanimously approved the transaction, and Zipcar shareholders representing ~32% of the outstanding common stock have agreed to vote their shares in support of the transaction. CAR expects to generate $50 to $70 million in annual synergies as a result of the transaction. In particular, Avis Budget expects significant cost reductions across the fleet life cycle, in addition to savings from eliminating Zipcar's public-company costs. Avis Budget also plans to achieve substantial cost savings by increasing fleet utilization across the two companies. These synergies, combined with the expected growth and rising profitability of Zipcar, are expected to make the transaction accretive to Avis Budget's earnings per share in the second year following the acquisition, excluding certain items and purchase-accounting effects. CAR reaffirmed guidance for FY12 with EPS of $2.35-2.45, excluding non-recurring items versus the $2.42 consensus and revenues of approximately $7.3 billion versus the $7.3 billion consensus. Adjusted EBITDA will be approximately $825 million to $840 million, excluding certain items, an increase of 35% to 38% compared to the prior year. Avis. "By combining with Zipcar, we will significantly increase our growth potential, both in the United States and internationally."
