The acquisition will help Avis better compete with Enterprise and Hertz, which have their own smaller car-sharing services. And having access to Avis' fleet of cars will help Zipcar meet high demand on weekends when most people take a trip to the grocery store or run other errands.
Avis estimates it will save about $50 to $70 million a year through combining the two businesses into one.
Avis Budget Group Inc. will pay $12.25 per share, which is a 49 percent premium to Zipcar's closing price on Friday. The stock lost more than half its value in early 2012 year as its results and outlook spooked Wall Street. But late last year, the stock began to recover as the company saw growth in members and revenue. And on Wednesday, the stock soared 48 percent to close at $12.18.
The boards of both companies unanimously approved the buyout. If Zipcar shareholders approve the deal, it's expected to close in the spring.
Avis, which is based in Parsippany, N.J., said it expects certain members of Zipcar management, including Chairman and CEO Scott Griffith and President and Chief Operating Officer Mark Norman, to help run its day-to-day operations.
Avis also maintained its 2012 adjusted earnings forecast Monday of about $2.35 to $2.45 per share on revenue of approximately $7.3 billion. Analysts predict earnings of $2.42 per share on revenue of $7.3 billion.
Avis shares jumped 4.8 percent to close at $20.77, after earlier hitting a 52-week high of $21.10.
AP Business Writer Michelle Chapman contributed to this report.