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Cendant embraces ‘radical’ change to affect travel division
Industry giant Cendant is breaking up into four different companies, a move attempting to build its stock prices that some news accounts called a “radical breakup.”
The $18 billion conglomerate, built up through the acquisition of dozens of companies, said it was separating into four independent companies: travel distribution, hospitality, vehicle rentals and real estate.
“The plan is designed to enable shareholders and the four companies to realize Cendant’s value, which has not yet been fully recognized by the market, despite the strong operating and financial performance,” said the company in a prepared statement.
“The move is perhaps the most vivid acknowledgement that the latest era of conglomerates built through mergers and acquisitions may be over,” wrote TheStreet.com.
“From inception, each of the new companies will be a major competitor in its sector,” said Cendant Chairman Henry R. Silverman.
Mr Silverman said all of Cendant’s businesses have done well but that has not been reflected in the stock market.
“We have concluded that it is in the best interests of our shareholders to establish pure-play enterprises, as we and our advisors believe the sum of the parts has a value in excess of our current share price,” he said.
Cendant includes a variety of prominent businesses, many of them travel-related such as Days Inn, Orbitz and Avis.
Cendant also owns Ramada and Super 8 hotels and the Budget rental car system.
Cendant emphasized that the planned transaction should not effect the operations of its business units. Suppliers, customers and others should see no change in operations.
The Cendant name will be retired and the four companies will have different names.
Cendant’s shareholders will own 100% of the equity in all four companies.
The move is expected to be completed by next summer.
Report by David Wilkening
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