HawaiiWritten by Havre On 02 January 2013
Steve Case To Make Out On Zipcar Sale

Zipcar (ZIP, NASDAQ, 52 week range 5.90 – 16.25) has agreed to be sold to Avis Budget Group Inc. for $491 million, or $12.25 per share. Steve Case’s Revolution Living LLC fund was an early investor in the car-sharing service, currently holding close to 20 percent ownership, and Case personally owns approximately 1 million shares.

Zipcar was started in 2000 and has about 760,000 members but has not yet turned a year-end profit. The company went public in April 2011 at $18 per share and saw its share price surge to $31.50 on the first day of trading. It has been downhill ever since, dropping below $6 per share just last November. The Avis offering represents an almost 50 percent premium to its share price before the deal was announced.

Avis was previously the loser in its attempt to buy Dollar Thrifty, which Hertz closed on late last year for $2.6 billion. Some are concerned about the high valuation for Zipcar, but Avis contends that it will see a yearly savings of $50 to $70 million through synergies including procurement and management. The effects on actually earnings remain to be seen.

The car-sharing sector of the rental market is expected to grow at a good clip, starting from Zipcar’s initial locations on college campuses to its activity in 20 cities in the U.S., Canada and Europe. The overall market could reach $10 billion in North America, Asia and Europe. Enterprise and Hertz are already rolling out similar offerings to their customers. This is definitely a model that would work well here in Hawaii, especially in the Waikiki market.

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Randy Havre has a wealth of experience in the financial industry. In 1987, he established his own full-service stock brokerage firm, which was also registered with the SEC as an Investment Advisory Firm, managing money for the State of Hawaii’s pension fund, among other portfolios. In 1994, he started his first of three Hawaii based Venture Capital Funds. Additionally, he wrote a weekly stock column in the Pacific Business News for 21 years, taught Finance 315 Portfolio Management and Investment Strategies at the University of Hawaii for five years and is on KHON’s Morning News as a business/financial analysis twice weekly. Over the past nine years, Havre has been active in South America doing business development work for some of his portfolio companies, mentoring entrepreneurs and advising investors.

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