Avis' buy of tiny Zipcar could be in antitrust fast lane

Sun Jan 13, 2013 3:51pm EST
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By Diane Bartz

WASHINGTON (Reuters) - When car rental giant Avis announced in early January that it planned to buy Zipcar, hipsters across the United States gnashed their teeth in unison.

But an informal poll by Reuters of nine antitrust experts, many of whom lamented the deal privately for the feared loss of a lively upstart, found that eight of the nine expect U.S. regulators to approve the deal.

The quirky Zipcar is admired for its new approach to car rental. Young, monied professionals who have decided to live car-free and broke college students can join and then rent a car for $11.25 an hour, often without leaving their neighborhood.

Beyond convenience and attentiveness to customers, there are the whimsical elements, like nicknaming the cars. There is, for example, a Toyota Tacoma pickup truck in Berkeley, California dubbed "Thaddeus."

Avis Budget Group Inc (CAR.O: Quote) said on January 2 that it would pay about $500 million in cash, a 49 percent premium, for Zipcar Inc ZIP.O, thereby taking the top spot in the fast-growing U.S. car-sharing market.

With Zipcar in its stable Avis is poised to zoom past larger rivals Hertz Global Holdings Inc (HTZ.N: Quote) and Enterprise Holdings Inc EPRIH.UL.

"My first reaction was concern because I have been very excited to see the significant growth of startups (like Zipcar and other car-sharing companies)," said Ilana Preuss, 40, a Washington community development advocate who uses Zipcar.

"One nightmare would be they ruin the customer service of Zipcar, the friendliness of Zipcar," she said. "I'm hopeful that Avis will be able to add to what Zipcar does. I would hate to see it change for the worse."   Continued...

A logo is shown on the side of a Zipcar in San Francisco, California January 2, 2013. REUTERS/Robert Galbraith