DGAP-News: Avis Budget Group to Acquire Zipcar for $12.25 Per Share in Cash
(firmenpresse) - Avis Budget Group, Inc.
02.01.2013 12:00
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-- Combined company will be the global leader in car sharing and mobility
solutions.
-- Combination expected to produce $50-70 million in annual synergies.
-- Transaction targeted to close in spring 2013.
-- Avis Budget re-affirms its prior estimates of full-year 2012 results.
PARSIPPANY, N.J. and CAMBRIDGE, Mass., Jan. 2, 2013 (GLOBE NEWSWIRE) -- Avis
Budget Group, Inc. (Nasdaq:CAR) and Zipcar, Inc. (Nasdaq:ZIP), the world's
leading car sharing network, today announced that Avis Budget Group has agreed
to acquire Zipcar for $12.25 per share in cash, a 49% premium over the closing
price on December 31, 2012, representing a total transaction value of
approximately $500 million. The transaction is subject to approval by Zipcar
shareholders and other customary closing conditions, and is expected to be
completed in the spring of 2013. The Boards of Directors of both companies
unanimously approved the transaction, and Zipcar shareholders representing
approximately 32% of the outstanding common stock have agreed to vote their
shares in support of the transaction.
Car sharing has grown to be a nearly $400 million business in the United States
and is expanding rapidly in major cities around the world. Zipcar has led this
industry, leading in innovation and world-class service. Zipcar now has more
than 760,000 members, known as Zipsters, with a market-leading presence in 20
major metropolitan areas in the United States, Canada and Europe, and fleet
positioned at over 300 college and university campuses. Zipcar has combined
leading-edge technology, an outstanding customer experience, and clear brand
messaging to develop strong loyalty and advocacy among its customers.
'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 expect to apply Avis Budget's experience and efficiencies
of fleet management with Zipcar's proven, customer-friendly technology to
accelerate the growth of the Zipcar brand and to provide more options for
Zipsters in more places. We also expect to leverage Zipcar's technology to
expand mobility solutions under the Avis and Budget brands.'
Avis Budget expects to generate $50 to $70 million in annual synergies as a
result of the transaction. In particular, Avis Budget expects significant cost
reductions across the fleet life cycle (from procurement to operations and
maintenance to disposition, as well as financing), in addition to savings from
eliminating Zipcar's public-company costs. Avis Budget also plans to achieve
substantial cost savings by increasing fleet utilization across the two
companies. Significant revenue growth opportunities exist, including by
leveraging Avis Budget's fleet to meet more of Zipsters' weekend demand, which
is currently constrained by fleet availability.
These synergies, combined with the expected growth and rising profitability of
Zipcar,are expected to make the transaction accretive to Avis Budget's
earnings per share in the second year following the acquisition, excluding
certain items and purchase-accounting effects.
'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. 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,' said Scott
Griffith, chairman and chief executive officer of Zipcar. 'As the leading
global provider of car sharing services, with a brand that is synonymous with
the category, we remain committed to the values and vision that have driven us
forward for many years, grounded by our passion for delivering a superior
experience to every member for every trip, every day. By combining Zipcar's
expertise in on-demand mobility with Avis Budget Group's expertise in global
fleet operations and vast global network, we will be able to accelerate the
revolution we began in personal mobility.'
'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.'
Following the acquisition, Zipcar will operate as a subsidiary of Avis Budget
Group and will continue with its planned move to new headquarters in Boston,
Massachusetts. Avis Budget anticipates that key members of the Zipcar
management team, including Mr. Griffith and Mark Norman, president and chief
operating officer, will continue to set the overall direction and run
day-to-day operations of Zipcar.
Avis Budget Group expects to fund the purchase price primarily with incremental
corporate debt borrowings, as well as available cash. As of September 30, 2012,
Avis Budget Group had cash and marketable securities of approximately $554
million, and Zipcar had cash and marketable securities of approximately $82
million, or approximately $2 per Zipcar share.
Citigroup is acting as financial advisor, and Kirkland&Ellis LLP is acting as
legal counsel, to Avis Budget Group. Morgan Stanley is acting as financial
advisor, and Latham&Watkins LLP is acting as legal counsel, to Zipcar.
Separately, Avis Budget Group today reiterated its previous estimates of its
full-year 2012 results. Avis Budget continues to expect that its full-year 2012
revenue will be approximately $7.3 billion, a 24% increase compared to 2011,
and that its 2012 Adjusted EBITDA will be approximately $825 million to $840
million, excluding certain items, an increase of 35% to 38% compared to the
prior year. Avis Budget also continues to expect that its 2012 pretax income
will be $450 million to $465 million and that its diluted earnings per share
will be approximately $2.35 to $2.45, excluding certain items.
Investor Conference Call
Avis Budget Group and Zipcar will host a conference call to discuss the
transaction on January 2, 2013, at 9:00 a.m. (ET). Investors may access the
call live at ir.avisbudgetgroup.com or ir.zipcar.com or by dialing 415-228-4734
and providing the access code 'Avis Budget.' Investors are encouraged to dial
in approximately 10 minutes prior to the call. A web replay will be available
at ir.avisbudgetgroup.com and at ir.zipcar.com following the call. A telephone
replay will be available from 12:00 noon (ET) on January 2 until 8:00 p.m. (ET)
on January 16 at 203-369-1604, access code: 'Avis Budget.'
About Avis Budget Group, Inc.
Avis Budget Group, Inc. is a leading global provider of vehicle rental services
through its Avis and Budget brands, with 10,000 rental locations in
approximately 175 countries around the world. Avis Budget Group operates most
of its car rental offices in North America, Europe and Australia directly, and
operates primarily through licensees in other parts of the world. Avis Budget
Group has approximately 29,000 employees and is headquartered in Parsippany,
N.J. More information is available at www.avisbudgetgroup.com.
The Avis Budget Group, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8891
About Zipcar, Inc.
Zipcar is the world's leading car sharing network, with more than 760,000
members and over 10,000 vehicles in urban areas and college campuses throughout
the United States, Canada, the United Kingdom, Spain and Austria. Zipcar offers
more than 30 makes and models of self-service vehicles by the hour or day to
residents and businesses looking for an alternative to the high costs and
hassles of owning a car. More information is available at www.zipcar.com.
Forward-Looking Statements
Certain statements in this press release constitute 'forward-looking
statements' within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Avis Budget Group or Zipcar to be materially different from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Statements preceded by, followed by or that
otherwise include the words 'believes', 'expects', 'anticipates', 'intends',
'projects', 'estimates', 'plans', 'may increase', 'forecast' and similar
expressions or future or conditional verbs such as 'will', 'should', 'would',
'may' and 'could' are based upon then current assumptions and expectations and
are generally forward-looking in nature and not historical facts. Any
statements that refer to outlook, expectations or other characterizations of
future events, circumstances or results, including all statements related to
future results, future fleet costs, acquisition synergies and cost-saving
initiatives are also forward-looking statements.
There can be no assurance that the proposed acquisition of Zipcar will occur as
currently contemplated, or at all, or that the expected benefits from the
transaction will be realized on the timetable currently contemplated, or at
all. Additional risks and uncertainties relating to the proposed acquisition of
Zipcar include, but are not limited to, uncertainties as to the satisfaction of
closing conditions to the acquisition, including timing and receipt of
regulatory approvals, timing and receipt of approval by the shareholders of
Zipcar, the respective parties' performance of their obligations under the
merger agreement relating to the acquisition, the status of capital markets,
including availability and cost of capital, and other factors affecting the
execution of the transaction.
Other risks that could cause future results to differ from those expressed by
the forward-looking statements included in this press release include, but are
not limited to, Avis Budget's ability to promptly and effectively integrate the
businesses of Avis Europe and Avis Budget, Avis Budget's ability to promptly
and effectively integrate the businesses of Zipcar and Avis Budget (if and when
the acquisition of Zipcar is completed), any change in economic conditions
generally, particularly during Avis Budget's or Zipcar's peak season or in key
market segments, the high level of competition in the vehicle rental industry,
a change in fleet costs as a result of a change in the cost for new vehicles
and/or the value of used vehicles, disruption in the supply of new vehicles,
disposition of vehicles not covered by manufacturer repurchase programs, the
financial condition of the manufacturers that supply Avis Budget's and Zipcar's
rental vehicles which could impact their ability to perform their obligations
under repurchase and/or guaranteed depreciation arrangements, any reduction in
travel demand, including any reduction in airline passenger traffic, any
occurrence or threat of terrorism, a significant increase in interest rates or
borrowing costs, Avis Budget's and Zipcar's ability to obtain financing for
their operations, including the funding of their vehicle fleets via the
asset-backed securities market, any changes to the cost or supply of fuel, any
fluctuations related to the mark-to-market of derivatives which hedge exposure
to exchange rates, interest rates and fuel costs, Avis Budget's and Zipcar's
ability to meet the financial and other covenants contained in the agreements
governing their indebtedness, risks associated with litigation, regulation or
governmental or regulatory inquiries or investigations involving Avis Budget or
Zipcar, and Avis Budget's and Zipcar's ability to accurately estimate their
future results and implement their strategies for cost savings and growth.
A further list and description of important assumptions and other important
factors that could cause actual results to differ materially from those in the
forward-looking statements are specified in Avis Budget's Annual Report on Form
10-K for the year ended December 31, 2011 and Zipcar's Annual Report on Form
10-K for the year ended December 31, 2011, included under headings such as
'Forward-Looking Statements', 'Risk Factors' and 'Management's Discussion and
Analysis of Financial Condition and Results of Operations', Avis Budget's and
Zipcar's most recently filed Form 10-Q, and in other filings and furnishings
made by Avis Budget and Zipcar with the SEC from time to time. Other unknown or
unpredictable factors could also have material adverse effects on Avis Budget's
or Zipcar's performance or achievements. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events discussed in
this press release may not occur. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date stated, or
if no date is stated, as of the date of this press release. Avis Budget and
Zipcar undertake no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the occurrence of
unanticipated events unless required by law.
Non-GAAP Measures
This press release includes certain financial measures such as Adjusted EBITDA,
pretax income and diluted earnings per share, which exclude certain items under
each measure and are not considered generally accepted accounting principles
('GAAP') measures as defined under SEC rules. For Avis Budget, Adjusted EBITDA
represents income (loss) before non-vehicle related depreciation and
amortization, any impairment charge, transaction-related costs, non-vehicle
related interest and income taxes. Adjusted EBITDA excluding certain items
represents Adjusted EBTIDA excluding restructuring-related expenses, costs
related to early extinguishment of debt and other certain items as such items
are not representative of the results of operations of our business. Avis
Budget believes that these non-GAAP measures are useful in measuring the
comparable results of Avis Budget period-over-period. The GAAP measures most
directly comparable to Adjusted EBITDA, pretax income and diluted earnings per
share, excluding certain items under each measure, are net income, pretax
income and diluted earnings per share. Because of the forward-looking nature of
Avis Budget's forecasted non-GAAP Adjusted EBITDA, pretax income and diluted
earnings per share, excluding certain items, specific quantifications of the
amounts that would be required to reconcile forecasted net income, pretax
income and diluted earnings per share are not available. Avis Budget believes
that there is a degree of volatility with respect to certain of Avis Budget's
GAAP measures which preclude it from providing accurate forecasted GAAP to
non-GAAP reconciliations. Based on the above, Avis Budget believes that
providing estimates of the amounts that would be required to reconcile the
range of the non-GAAP Adjusted EBITDA, pretax income and diluted earnings per
share, excluding certain items, to forecasted net income, pretax income, and
diluted earnings per share would imply a degree of precision that would be
confusing or misleading to investors for the reasons identified above.
Additional Information
In connection with the meeting of Zipcar shareholders to be held with respect
to the proposed merger, Zipcar will file a proxy statement with the Securities
and Exchange Commission. INVESTORS AND SECURITYHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR
INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able to obtain a
free copy of the proxy statement (when available) and other relevant documents
filed by Zipcar with the SEC from the SEC's website at http://www.sec.gov and
from Zipcar by directing a request to Zipcar, Inc., 25 First Street, 4th Floor,
Cambridge, MA 02141, Attention: Investor Relations.
Zipcar and its directors, executive officers and certain other employees may be
deemed to be participants in the solicitation of proxies of Zipcar shareholders
in connection with the proposed merger. Investors and security holders may
obtain more detailed information regarding the names, affiliations and
interests of Zipcar directors and executive officers by reading Zipcar's proxy
statement for its 2012 annual meeting of shareholders, which was filed with the
SEC on April 12, 2012. Additional information regarding potential participants
in such proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in the proxy
statement and other relevant materials filed by Zipcar with the SEC in
connection with the proposed merger when they become available.
CONTACT: Avis Budget Group Media Contact:
John Barrows
973-496-7865
PR(at)avisbudget.com
Avis Budget Group Investor Contact:
Neal Goldner
973-496-5086
IR(at)avisbudget.com
Zipcar Media Contact:
Karen Drake
617-336-4323
PR(at)zipcar.com
Zipcar Investor Contacts:
Jamie Moser / Nick Lamplough
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
jmoser(at)joelefrank.com
nlamplough(at)joelefrank.com
Jonathan Schaffer
The Blueshirt Group
212-871-3953
IR(at)zipcar.com
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