January 03, 2013 09:35 ET

Acquisitions and Expansions Shine Spotlight on Avis Budget and Hertz Global

The Provides Stock Research on Avis Budget Group and Hertz Global Holdings

NEW YORK, NY--(Marketwire - Jan 3, 2013) - The rental and leasing services industry which includes companies such as Avis Budget Group Inc. (NASDAQ: CAR) and Hertz Global Holdings (NYSE: HTZ) has been making headlines of late, as Avis Budget Group recently announced it has agreed to purchase Zipcar Inc. for around $500 million. At a per share price of $12.25, the acquisition represents an almost 50% premium above the closing share price as of December 31st, 2012. Several companies in the industry have also been grabbing headlines with their international expansion efforts, which is also a positive sign. The industry could also receive a boost from a "fiscal cliff" deal recently reached in Washington. 

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While a number of significant developments have been ongoing in the industry, Avis Budget Group's acquisition of top car sharing network Zipcar has made the biggest splash of late. Zipcar has over 760,000 members and a strong presence both domestically and abroad. The addition of Zipcar and its car sharing network will also provide Avis Budget with a greater ability to service a broader range of customers. Consolidation in the industry is also a positive in regards to pricing, as less competition could mean higher margins for remaining industry players. The Board of Directors for both Zipcar and Avis Budget have unanimously approved the deal, and it is anticipated that the deal will close in the spring of 2013, subject to the approval of Zipcar shareholders and a number of routine closing conditions.

Many industries, including rental and leasing services, also received positive news when Congress recently managed to pass an 11th hour bill to stop and/or delay significant tax hikes and budget cuts that have become popularly known as the "fiscal cliff." The news augurs well, as many believed that if a deal could not be reached the United States could have plunged into a recession. Although several significant issues have yet to be resolved, companies and individuals alike seem to be breathing a sigh of relief. The major markets also responded positively, which bodes well moving forward. 

Good news on the home front is certainly a plus for the rental and leasing services industry, and the story from abroad is also encouraging. While the Eurozone continues to face its fair share of challenges, there are certainly some bright spots as well. Hertz made it into the headlines last month, as the company announced it has launched an ElectriCity initiative in Milan. Under the initiative the company is offering Nissan LEAF electric vehicles that can be rented by the hour or day. Hertz has launched similar initiatives in New York, Paris and London, among other major cities. The company has also been announcing a number of promotions of late. Along with its ElectriCity project in Milan the company has also teamed up with IKEA to offer discount rental prices for member customers of the IKEA Family. The company has also newly launched its winter sale, which provides customers with savings on car rentals.

Avis has also been active abroad, as it stated last month that it has expanded its presence in Singapore by adding three new service points where customers can access rental vehicles. All three of the locations are located in the Central Business District. 

Although there are challenges facing the industry and companies such as Avis Budget and Hertz, the outlook for the beginning of 2013 is an upbeat one. Acquisitions could provide companies with an improved pricing environment, and last minute action by the U.S. government to avoid the fiscal cliff looks poised to benefit the industry as well. Companies with a strong international presence are also performing well, and if the major world economies continue to move forward, it could be a strong year for the car rental industry.

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