Published on January 4th, 2013 | by Joshua S Hill2
Avis Buys Zipcar In Deal Worth $500 Million, But Zipcar Now Being Sued
Zipcar would act as a subsidiary of Avis Budget Group if the transaction is given the green light. However, reports suggest that the deal is already under investigation by Bernstein Liebhard LLP, who has stated that Zipcar has “breached its fiduciary duty to its shareholders in agreeing to sell Zipcar to Avis Budget Group.”
“We are delighted to announce our intention to join the Avis Budget Group family of companies, and we believe this combination is a win across the board for our members, shareholders and employees,” said Scott Griffith, chairman and chief executive officer of Zipcar. ”We will be well positioned to accelerate enhancements to the Zipcar member experience with more offers and additional services as well as an expanded network of locations.”
Avis Budget hopes to generate $50 to $70 million in annual synergies as a result of the transaction.
“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,” said Ronald L. Nelson, Avis Budget Group chairman and chief executive officer.
“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. We also expect to leverage Zipcar’s technology to expand mobility solutions under the Avis and Budget brands.”
“Avis Budget’s existing infrastructure, scale and experience with managing multiple brands make us uniquely positioned to accelerate the growth and profitability of Zipcar,” Mr. Nelson added. “At the same time, we are committed to retaining the elements of the Zipcar brand and culture that have allowed Zipcar to achieve such rapid growth and success over the last twelve years.”
Bernstein Liebhard LLP v. Zipcar Lawsuit
However, as mentioned, law firm Bernstein Liebhard LLP has already announced an investigation into the deal, investigating whether “the Board of Directors of Zipcar breached its fiduciary duty to its shareholders in agreeing to sell Zipcar to Avis Budget Group.”
Under the terms of the agreement, Zipcar shareholders will receive $12.25 in cash for each share they own. The investigation is focused on the potential unfairness of the price to Zipcar shareholders and the process by which the Zipcar Board of Directors considered and approved the transaction.