Avis Budget to buy Zipcar for $500m Avis Budget Group, the US car rental chain, has agreed to buy car-sharing network Zipcar for nearly $500m. Zipcar had one of the strongest US debuts when it launched in April 2011 with its shares soaring 56 per cent on their first day of trading. They have since fallen 72 per cent from their peak. The offer of $12.25 a share in cash represents a 49 per cent premium over the closing price on the last day of trading. Steve Case, the founder of AOL, stands to receive $96m from the sale along with his venture capital firm Revolution Living, which is the largest shareholder in Zipcar. Revolution owns about 17 per cent, while Mr Case personally owns 2.5 per cent, according to Bloomberg data. It had previously considered trying to acquire Dollar Thrifty, which was taken over by Hertz last year. Despite Zipcar being barely profitable, Avis Budget stock was up 5 per cent on news of the deal. In the most recent quarter, Zipcar's net income reached $4.3m, on revenue of $78m, a 15 per cent increase from the same time a year earlier. The deal marks an about-face for Avis Budget chairman and chief executive Ronald Nelson. "I've been somewhat dismissive of car sharing in the past," he said. But what I've come to realise is that car sharing . . . is complementary to our traditional car rental model. The companies said car sharing was now a $400m-a-year business in the US. Zipcar and other car-sharing services have been more successful than traditional car rental companies at reacting to the trend towards declining car ownership in many industrialised countries. "We believe this is a major step forward to reaching our goal of fundamentally revolutionising personal mobility," said Scott Griffith, chairman and chief executive of Zipcar. Avis Budget said it expected to make $50m to $70m in annual synergies from the deal, largely by using its existing operations to buy, operate, service and sell the cars that Zipcar needed to operate. Avis Budget was advised by Citi, and received legal advice from Kirkland & Ellis. Additional reporting by Robert Wright