Avis Budget Group, Inc. announced today that it has acquired Payless Car Rental, the sixth largest car rental company in North America, for approximately $50 million in cash. The addition of the Payless brand will give Avis Budget Group a strong position in the fast-growing deep-value segment of the car rental industry. The deal to buy Payless follows Avis Budget’s acquisition of Zipcar earlier this year.

Founded in 1971, Payless brings approximately 120 rental locations to Avis Budget Group's global network in the United States, Canada, Europe and South America, including many in major airport locations. Similar to Avis Budget Group, Payless operates with a hybrid model of corporately operated locations along with locations operated by licensees. Unlike the Avis Budget Group's premium Avis brand and mid-tier Budget brand, Payless focuses on the deep-value segment of car rental customers.

Payless generates approximately $80 million in annual revenue, while Avis Budget Group posted approximately $5 billion in revenue in 2012.

Avis Budget said it intends to operate Payless as a separate brand from a customer perspective, while realizing significant cost savings as a result of the transaction, primarily from lower vehicle depreciation, reduced fleet interest expense and administrative cost synergies.

"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," said Ronald L. Nelson, Avis Budget Group chairman and chief executive officer. "At the same time, we expect this transaction to generate an attractive return on our investment."