Avis Zipcar sale approved for rental network offer of $500 million
Car rental agency Avis is buying car sharing service Zipcar, though a few parties aren't too happy with the Avis Zipcar sale. Photo Credit: Mariordo/Wikimedia Commons/CC-BY
Not everyone needs a car all the time, which has led to car sharing networks popping up including Zipcar, the archetype of the model. The company is being bought by Avis, the car rental conglomerate, though some aren’t necessarily happy with the Avis Zipcar sale.
Avis Zipcar sale merges old model with new
Car rental has been fairly standard for a long time. You go to a lot, pick a car, pay for it, drive it and drop it off. Then you get dinged with bogus charges because rental companies want to wring every last drop of blood from a stone that they can, namely customers’ wallets.
However, in the past few years, car sharing networks have emerged with one the largest being Zipcar. Zipcar is actually pretty novel, as it’s like a timeshare for cars. One buys a membership and requests a car for a certain amount of time on a certain date. The car is unlocked with a key card and it’s off to the races, so to speak.
Avis, the car rental company, has just purchased Zipcar, according to Daily Finance, for a cool $491 million in cash, meaning the Avis Zipcar purchase could extend Zipcar’s reach nationwide.
Not everyone is happy
Though already available in a number of cities, more people could participate in Zipcar, which makes more sense than buying a car, paying for maintenance, insurance and fuel, at least for anyone that doesn’t definitely need a car every day. That said, a number of people aren’t happy with the Avis-Zipcar sale.
According to TechCrunch, a number of Zipcar shareholders aren’t happy with the sale, which works out to $12.25 per share in the buyout, asserting they’re not getting as much as they should. Zipcar’s stock hit a high of $16 per share in the past year, but dipped to $8.24 on Dec. 31, 2012.. The stock has been a dog since the Zipcar IPO in 2011, constantly declining from it’s opening share price of $27.96.
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Others, such as the Washington Post’s Steven Pearlstein in a recent op-ed, believe Avis Budget, being the large corporate entity it is, will ruin Zipcar’s culture by taking away from it’s urban hipness, user-friendliness and more important, economy, as Avis is sure to try to get some blood from that turnip, so to speak.
Remains to be seen
Whether the Avis Zipcar deal means anything will mean anything bad for consumers remains to be seen. If anything, Avis is being a Johnny-Come-A-Lately, as competitor Hertz has a car sharing service as well. The deal does still have to be approved by financial regulators and the shareholders cited by TechCrunch are also lawyering up with the intent of suing to stop the sale.
Then again, people who use Zipcar probably still don’t need a car every day, which is why they use it. Membership fees are much cheaper than a down payment on a car loan, to be sure.