Avis to buy Zipcar for $500 million

BOSTON, Jan. 2 (UPI) -- U.S. car rental firm Avis Budget Group said it has agreed to purchase Zipcar for $500 million, expanding its offerings to hourly rentals.

Zipcar rents cars by the hour or by the day, representing a growing segment of the competitive market of car rentals. Its outlets are generally in large cities or near college campuses, where short-term renting can be a viable alternative to renting a car in 24-hour blocks of time.

The deal presents Zipcar with a 49 percent premium on its closing stock price at the end of 2012, The New York Times reported Wednesday.

Avis said its current fleet could help Zipcar during periods of peak demand.

The overlapping synergies, which represents duplicating costs that can be saved with a merger, come to $50 million to $70 million per year, Avis said.

Zipcar will operate as an Avis subsidiary, Scott Griffith is expected to remain as chief executive officer, and Mark Norman is to stay on as president and chief operating officer.

Zipcar will keep its headquarters in Boston, but move to a new location, the Times said.