PARSIPPANY, N.J. –

Avis Budget Group has purchased Payless Car Rental in a $50 million cash deal.  In announcing the news this morning, Avis indicated that adding North America’s sixth largest car-rental company “will give Avis Budget Group a strong position in the fast-growing deep-value segment of the car rental industry.”

From a customer perspective, Avis Budget plans to operate Payless as a separate brand. Avis Budget said the transaction gives it “significant cost savings,” with most of these coming from lower vehicle depreciation, reduced fleet interest expense and administrative cost synergies.

Sharing more about Payless, officials said the 42-year-old company brings about 120 rental locations in the Avis Budget fold.

Payless’ is said to utilize a “hybrid model” of business much like Avis Budget. It features corporately operated locations along with locations operated by licensees.  However, Payless differs from the premium Avis brand and mid-tier brand in that it “focuses on the deep-value segment of car rental customers.”

Payless’ annual revenue was estimated at $80 million.

“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 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.”