Monday, November 05, 2007

Car-Sharing firms merge

The technology magazine RedHerring is reporting that two car-sharing firms in the U.S. are merging. The result gives an operator with a footprint that covers a significant number of metropolitan areas in the U.S.

Zipcar Carpools with Flexcar

Venture-backed Zipcar, whose by-the-hour car-sharing service is used by college students and urban dwellers, is merging with Flexcar, a cross-continent rival service funded by Steve Case’s Revolution, the companies said Wednesday.

In a conference call, Scott Griffith, chairman and chief executive of the combined company, said the top post-merger shareholders will be venture capital funders Benchmark Capital, Greylock Partners, Globespan Capital Partners, and Revolution. Financial terms of the deal were not disclosed.

Jonathan Seelig, a managing director at Boston-based Globespan, said in a telephone interview that bigger is better in the car-share business. "This business is better at scale," he said. "I love that I can use cars in San Francisco, where I travel frequently and Seattle, where I also spend some time. It’s about more people, more cars, more places."

The only markets where the companies compete head-to-head are San Francisco and Washington, D.C. Cambridge, Massachusetts-based Zipcar operates in markets including New York City, Boston, Toronto, and London. Flexcar operates in Los Angeles, San Diego, Atlanta, Philadelphia, and Seattle, where its headquarters were located.

“There’s very little geographic overlap between the two companies,” said Mark Norman, former chief executive of Flexcar, who becomes president and chief operating officer of the combined company, which will take the Zipcar name and be based in Cambridge.

Mr. Griffith said the combined company will have about 180,000 users, about 120,000 of whom were Zipcar members. The deal is expected to close by week’s end.

"When we acquired Flexcar in 2005, our goal was to bring car sharing to more people in more places," Mr. Case said in a statement. "The Zipcar merger will accelerate this effort."

In July 2005, Zipcar raised $10 million in a funding round led by Benchmark, followed by a $25 million round in November 2006. Officials said the combined company has sufficient funding to take it through the merger and beyond.

In New York City, Zipcar’s rates start at $5.85 per hour and $58.65 per day for frequent users and $10 per hour or $69 per day for occasional users.

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