U.S. Markets close in 5 hrs 25 mins

The Best Explanation You'll Read On Why Avis Bought Zipcar For $500 Million

Megan Rose Dickey

In light of Avis Budget's recent $500 million acquisition of Zipcar, Felix Salmon at Reuters argues that Avis is a clear winner in the game of mergers and acquisitions.

Here's why:

  • Hertz's hefty $2.6 billion acquisition of Dollar Thrifty saved Avis $1.5 billion, since Avis lost the deal to Hertz. It also minimized the number of competitors in the market.
  • Zipcar's market cap fell from $1.2 billion to $330 million at the end of 2012, while Avis' stayed strong at $2.1 billion, "making an acquisition both easy and obvious."
  • Zipcar is the leader in the car-renting space at a time when there's becoming less of a need for households to own a car.
  • Zipcar has a better reputation than both Avis and Budget. 
  • It's also much easier to rent from Zipcar than it is from Budget.

Read the full story here on Reuters.

More From Business Insider