July 15 (Bloomberg) -- Avis Budget Group Inc. acquired Payless Car Rental for about $50 million in cash, adding a company that focuses on value customers.
Payless has about 120 locations in North America, Europe and South America and generates $80 million in annual revenue, according to a statement.
Avis, the third-biggest U.S. car-rental company, acquired car-sharing company Zipcar Inc. for about $500 million in March. The company is seeking to compete in a consolidating industry where rival Hertz Global Holdings Inc. received final regulatory approval last week of its $2.3 billion acquisition of Dollar Thrifty Automotive Group, solidifying Hertz’s position as the No. 2 player.
“Payless expands our global footprint, enables us to support Budget’s mid-tier brand positioning, and gives us greater flexibility to capitalize on opportunities in an additional segment of the car rental market in order to help accelerate our growth,” Avis Budget Chief Executive Officer Ron Nelson said in the statement.
Avis Budget, based in Parsippany, New Jersey, plans to operate Payless as a separate brand, according to the statement. The company said it expects “significant” cost savings from the transaction, including from reduced fleet interest expense.
Closely held Enterprise Holdings Inc., based in St. Louis, is the largest U.S. car-rental company.
Avis Budget fell 1.6 percent to $32.22 at the close in New York. The shares have surged 63 percent this year, compared with an 18 percent gain for the Russell 1000 Index.
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