Avis Budget Group (CAR) said Monday it acquired Payless Car Rental in a $50 million cash deal, as the vehicle renter looks to expand its discount car-rental portfolio.
Avis will operate privately held Payless as a separate brand.
“Payless expands our global footprint, enables us to support Budget's mid-tier brand positioning, and gives us greater flexibility to capitalize on opportunities in an additional segment of the car rental market in order to help accelerate our growth,” Avis Chairman and Chief Executive Ronald L. Nelson said in a statement.
Payless, founded in 1971, has about 120 rental locations that generate about $80 million in annual revenue. According to Avis, Payless is the sixth-largest car rental company in North America.
The deal comes in the wake of a strong 2012 for Avis. Higher prices in the used-car market helped keep fleet costs low, while Avis also benefited from its $1 billion deal to take full control of Avis Europe and its $500 million purchase of car-sharing company Zipcar.
Avis did lose a bidding war last year for Dollar Thrifty Automotive Group, for which Hertz Global Holdings (HTZ) agreed to pay $2.3 billion.
In May, Avis reported a wider first-quarter loss as fleet costs in North America climbed amid a weaker used-car market. The company did post overall revenue growth on higher pricing and volume.
Shares of Avis closed Friday at $32.76, up 114% over the last 12 months.