Avis buys Zipcar and grows car-sharing capabilities internationally

Zipcar, a car-sharing company that specializes in renting cars by the hour or day, announced Wednesday it will be acquired by Avis Budget for $491 million, or $12.25 a share.

The action will help Avis compete against Hertz Global Holdings, which became the world's second largest car-rental company in 2012 following its purchase of Dollar Thrifty car-rental company for $2.6 billion, according to a Bloomberg report.

“By combining with Zipcar, we will significantly increase our growth potential -- both in the U.S. and internationally -- and will position our company to better serve a greater variety of consumer and commercial transportation needs,” Ronald L. Nelson, Avis Budget chief executive officer, said in a statement.

The trend of car sharing has grown to a $400 million business in the United States alone according to Zipcar, and Avis is expecting the purchase of Zipcar to grow annual earnings by $50 to $70 million.

Zipcar currently has 760,000 members and is active in 20 cities throughout the United States, Canada and Europe.

By Sherrice Gilsbach