Prices May Zip Higher After Zipcar, Avis Deal
Zipcar, which was founded in 2000, was able to drive impressive top line growth since the onset of the financial crisis, however, profits for the company have been illusive.
Since 2008, revenue has more than doubled to well over $200 million, but the company's been unable to turn an annual profit.
For Avis, the acquisition of Zipcar is also to likely reflect a similar technological bent as Priceline's late 2012 deal for Kayak Software. In both instances, the acquirer may benefit from owning a more tech savvy upstart.
In a statement announcing the deal, Avis said it expects to "leverage Zipcar's technology to expand mobility solutions under the Avis and Budget brands," in what could be a synergy that goes well beyond operating, fleet and financing expense.Avis expects Zipcar to add to its adjusted profit in the second year after the close of Wednesday's deal. Given Avis's projected operating synergies, Zipcar may soon finally deliver the financial performance to go with its well-liked service. Increasingly, as the travel industry players, its unclear just how much of the value of a current M&A boom falls on the backs of consumers by way of price increases. -- Written by Antoine Gara in New York
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