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Not So Fast: Avis’ Proposed $500M Zipcar Buy Being Investigated For Short-Changing Shareholders

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Earlier today the sharing economy startup world was abruptly awoken from its holiday slumber with the news that car rental giant Avis would buy car-sharing company Zipcar for $500 million. No sooner had the news gotten out, though, that some shareholders in Zipcar have cried foul.

The securities litigation firm of Powers Taylor, along with Willie Briscoe, the ex-U.S. SEC attorney, today announced that they would be investigating and possibly filing a lawsuit to block the deal. The premise: a $500 million acquisition price works out to shareholders getting $12.25 in cash for each share, below Zipcar’s 52-week high of $16.25 per share.

“Due to the proposed sale price, the size of the deal and other factors, we believe this transaction may undervalue Zipcar’s stock,” said Briscoe in a statement. “Our proposed lawsuit will seek to obtain the highest share price for all shareholders.”

Update: Since posting this article, another firm, Brodsky & Smith, has weighed in with an investigation  over the proposed sale price of Zipcar to Avis.

Although Zipcar may have been trading at over $16 per share at some point in the last year, it’s not clear that this will be enough to block the deal.

As we pointed out earlier today in a post when Avis’s Zipcar offer was announced, Zipcar has actually had a pretty bad time since going public in April 2011. It’s lost nearly two-thirds of its post-IPO value, when it was trading as high as $27.96. Its closing price on December 31 was significantly lower, with the $500 million offer from Avis representing a 49% premium on Zipcar’s trading price that day, of $8.24.

On the other hand, Zipcar currently has 760,000 members across the U.S., UK and Canada. The lawyers cite at least one analyst that claims that the “true inherent value” of the company is at least $13 per share.

The stock is currently trading at about $12.20 a share.

So it will be a matter for the lawyers to convince shareholders that Zipcar has enough potential, and was undervalued significantly, to merit the case.

The lawyers are now appealing to Zipcar shareholders to contact them if they would like to join the action. Contact details for those interested are in the full release below.

DALLAS–(BUSINESS WIRE)–Former United States Securities and Exchange Commission attorney Willie Briscoe and the securities litigation firm of Powers Taylor, LLP are investigating the sale of Zipcar, Inc. (“Zipcar”) (Nasdaq: ZIP) to Avis Budget Group, Inc. for shareholders. Under the terms of the proposed deal valued at approximately $500 million, Zipcar shareholders will only receive $12.25 in cash for each share of Zipcar stock owned, which is below the 52 week high of $16.25 per share.

If you are an affected investor, and you want to learn more about the lawsuit or join the action, contact Zach Groover at Powers Taylor, LLP, toll free (877) 728-9607, via email at zach@powerstaylor.com or Willie Briscoe at The Briscoe Law Firm, PLLC, (214) 239-4568, or via email at WBriscoe@TheBriscoeLawFirm.com. There is no cost or fee to you.

The Zipcar sale investigation centers on whether Zipcar’s shareholders are receiving adequate compensation for their shares in the buyout, whether the transaction undervalues Zipcar’s stock, and whether Zipcar’s board attempted to obtain the highest share price for all shareholders prior to agreeing to the deal. Notably, at least one analyst with Yahoo! Finance has estimated that the true inherent value of Zipcar could be as high as $13.00 per share, well above the proposed sale price. Shareholder rights attorney Willie Briscoe stated that “due to the proposed sale price, the size of the deal and other factors, we believe this transaction may undervalue Zipcar’s stock. Our proposed lawsuit will seek to obtain the highest share price for all shareholders.”

The Briscoe Law Firm, PLLC is a full service business litigation and shareholder rights advocacy firm with more than 20 years of experience in complex litigation and transactional matters.

Powers Taylor, LLP is a boutique litigation law firm that handles a variety of complex business litigation matters, including claims of investor and stockholder fraud, shareholder oppression, shareholder derivative suits, and security class actions.