Zipcar to Settle Shareholder Lawsuit Tied to Planned Avis Deal

   By John Kell 
 

Hourly car-rental company Zipcar Inc. (ZIP) disclosed it signed an agreement to settle a class-action shareholder lawsuit and other legal cases stemming from a $500 million takeover agreement with Avis Budget Group Inc. (CAR).

In a Securities and Exchange Commission filing, Zipcar said it signed a memorandum of understanding to settle a class-action lawsuit filed in Delaware, as well as two separate cases in Massachusetts courts, where Zipcar is based.

Zipcar, which didn't disclose the financial terms of the settlements, said it wouldn't admit liability or wrongdoing. According to the SEC filing, Zipcar said it can't yet guarantee the terms of the settlement will be finalized by the parties or that the court will approve the settlement.

Zipcar early this year agreed to be acquired by Avis, a deal that will vault Avis ahead of its peers in addressing the niche hourly rental market. Though the per-share purchase price of $12.25 was a 49% premium to the Zipcar's value before the deal was disclosed, it also came at a 32% discount to the company's April 2011 initial public offering price.

As part of the settlement, Zipcar agreed to make some additional disclosures related to the proposed Avis merger public. Some of Zipcar's new disclosures offer more details as to the nature of the conversation between executives at the companies, as well as Morgan Stanley's (MS) role as a financial adviser.

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