PARSIPPANY, N.J. (AP) -- Avis is spending $50 million to acquire Payless Car Rental and broaden lower-cost options to customers.
Payless, which was founded in Spokane, Wash., offers "deals of the hour" and "last-minute deals" to renters. Now based in St Petersburg, Fla., the company has grown to become the sixth-largest rental car company in North America.
Avis began pushing its traditional rental boundaries from the start this year, buying the car-sharing service Zipcar for about $490 million in early January.
For Avis, which focuses on premium and mid-tier rentals, the all-cash deal for Payless provides lower vehicle depreciation, reduced fleet interest expense and savings from combined administrative operations.
Payless operates 120 rental locations in the U.S., Canada, Europe and South America, and generates about $80 million in annual revenue.
Avis will run Payless as a separate brand.
"Payless expands our global footprint, enables us to support Budget's mid-tier brand positioning, and gives us greater flexibility to capitalize on opportunities in an additional segment of the car rental market in order to help accelerate our growth," said Chairman and CEO Ronald Nelson.
Shares of Avis Budget Group Inc., based in Parsippany, N.J., have been on a tear this year, up by almost 70 percent. Shares hit a 52-week high last month.