With Avis’ Zipcar acquisition, another public Massachusetts company gets bought out, although the plucky, profitable carsharing service will remain helmed by Scott Griffith and will continue a planned move to Boston’s Innovation District.
“We will be well positioned to accelerate enhancements to the Zipcar member experience with more offers and additional services as well as an expanded network of locations,” said Scott Griffith, chief executive of Zipcar, in a statement released by Avis. “By combining Zipcar’s expertise in on-demand mobility with Avis Budget Group’s expertise in global fleet operations and vast global network, we will be able to accelerate the revolution we began in personal mobility.”
The announcement was generally hailed by fans of Boston’s start-up community as validation of a model that, at times, seemed precarious: Up until Nov. 9, when it announced higher-than-expected profit, its stock had declined 55 percent through the year.
Scott Kirsner profiled Zipcar shortly before its IPO when it only had 240 cars spread across three cities. The company recently noted it now has over 300 car stations just in Boston.
Kirsner had called it “one of the most promising start-ups in Boston” back in 2003.
But even with the 49 percent premium paid over its current stock price, Zipcar is selling for a fraction of the $1.2 billion valuation it saw shortly after its initial public offering — at the time, the Wall Street Journal noted that was “about 40% less than the market value of rental-car giant Avis Budget Group.”
There was also mixed feelings about another large Boston start-up losing its independence.
“Also, not for nothing, this is another example of a good Boston-based company moving up and out,” tweeted Nathan Spencer, the chief executive of Zipcar.
Local investor Rob Go was similarly non-plussed.
I'm kind of bummed by the Avis/Zipcar deal. Incredibly innovative company, likely doomed by a dinosaur parent.Hope I'm wrong.— robgo (@robgo) January 2, 2013
Kayak was acquired by Priceline.com earlier this year in a $1.8 billion deal, and while both companies are keeping their respective executive teams and local headquarters, for now, there’s a history of these types of acquisitions taking talent, capital, and jobs away from the Bay State.
Companies like Zipcar and Kayak, however, which require high, if varying, degrees of technical prowess might find that keeping a strong local presence makes it easier to recruit and retain an innovative edge. Time will tell.
In the meantime, Scott Kirsner was quick to point out how Zipcar could receive some “innovative” trickledown of its own:
Avis says the 2 key things it can introduce to Zipcar?s model are velvet-rope queues & carbon copy forms in quadruplicate.— Scott Kirsner (@ScottKirsner) January 2, 2013