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Steve Case grosses $96 million on sale of Zipcar

By Bloomberg News

LAST UPDATED: 12:37 p.m. HST, Jan 02, 2013

Steve Case and his Revolution LLC fund for startups will gross about $96 million in the sale of car-sharing service Zipcar Inc. to Avis Budget Group Inc., a deal that validated his early backing in the industry.

Case, the co-founder of America Online Inc., invested in car sharing in the mid-2000s, when the business model was still untested. By August 2012, his fund was the largest shareholder in Cambridge, Massachusetts-based Zipcar, which rents cars by the hour or the day in cities and on college campuses.

The success with Zipcar reinforces Revolution’s stated goal of investing in startups designed to disrupt established business. The Zipcar exit will be among the largest for the fund, created in 2005, said a person familiar with Revolution’s finances who wasn’t authorized to talk publicly about them.

Zipcar’s board agreed to sell the company to Parsippany, New Jersey-based Avis Budget for $12.25 a share, or about $491 million,  the companies said today in a statement. The offer, which has been accepted by holders of 32 percent of Zipcar’s shares, is 49 percent higher than Zipcar’s Dec. 31 closing price.

Case’s Revolution Living LLC had a 16 percent stake as of Aug. 28, according to data compiled by Bloomberg. Case, a board member, also personally owns 1 million shares, the data show.

Early Investment

After leading AOL’s acquisition of Time Warner Inc. for $124 billion in 2001, Case stepped down as chairman of the combined company in 2003. The board voted to drop AOL from the company’s name in September that year, reflecting investors’ disappointment in the slumping shares.

Case, 54, formed Revolution in 2005 as a $500 million fund to invest in health care, wellness and other companies. Flexcar, a car-sharing startup, was one of his first forays in August 2005. Case said at the time he got interested in Flexcar while walking past one of its parking spots at 17th and O streets, near Revolution’s offices in Washington. He used the service several times to reach meetings around the city. Zipcar bought Flexcar in 2007.

Revolution now has investments in about 30 companies. They include daily deal website LivingSocial Inc.; exercise tracking venture RunKeeper; HelloWallet, an online service helping employees manage their expenses; and SparkPeople, a website helping people reach their fitness goals.

Last year, Revolution cleared about $100 million in the sale of Medicare exchange company Extend Health Inc. to Towers Watson & Co, the person familiar said. In the largest exit, American Express Co. bought money-card company Revolution Money in 2010 for about $300 million. The fund owned just under 50 percent of Revolution Money, according to the person. Another Revolution startup, Lime Media, was merged with health lifestyle company Gaiam Inc. in 2007. Financial terms for weren’t disclosed.

Zipcar IPO

Zipcar sold shares in an initial public offering at $18 each in April 2011. After initial gains, the stock had been trading under its IPO price for the past year. Demand for car- sharing, however, continued to surge, prompting Enterprise Holdings Inc. and Hertz Global Holdings Inc., the two largest U.S. car-rental companies, to offer such services to customers. Zipcar’s acquisition by Avis Budget, the No. 3, signals a shift in the industry to embrace drivers who don’t want to own cars.

Case, who co-founded AOL in 1985, also chairs efforts on entrepreneurship for President Barack Obama’s Council on Jobs and Competitiveness. Case didn’t respond to an e-mail and phone call seeking comment.

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false wrote:
Man this bugga is loaded eh?
on January 2,2013 | 01:23PM
serious wrote:
He works for a living--not a "D"!!!
on January 2,2013 | 02:51PM
iwanaknow wrote:
Steve, throw some of that kala towards Hawaii ya?
on January 2,2013 | 03:26PM
kainalu wrote:
Money makes money.
on January 2,2013 | 03:36PM
Roosevelt wrote:
A great investment? Get past the headline. The IPO was priced at $18.00. The buyout by Avis was $12.25 - which was 49% higher than the current share price. Maybe Mr. Case made some money as he likely held preferred shares secured at a huge discount - but what about the poor schmucks who bought in at $18.00? Looks like another AOL to me.
on January 2,2013 | 04:44PM
Papakolea wrote:
People like Steve Case made this country what it is today a hundred plus years ago. He rolled the dice early in his career and put it all on the line and through education, a strong work ethic, luck, and willingness to take risks, he created an empire as well as tens of thousands of jobs.
on January 2,2013 | 07:15PM
kukui_nut wrote:
Case for President!
on January 2,2013 | 08:43PM
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