$4.3 billion sale boosts Cendant

July 01, 2006|By BLOOMBERG NEWS

NEW YORK -- Cendant Corp., the travel-services company that never fully recovered from an accounting scandal nine years ago, agreed yesterday to sell the division that includes its Orbitz Web site to the Blackstone Group for $4.3 billion.

Cendant's shares had their biggest gain in two months after the travel provider made progress on its plan to break itself into four separate companies. The shares rose 52 cents, or 3.3 percent, to close at $16.29 on the New York Stock Exchange. They have fallen 5.6 percent this year.

Proceeds from the sale of Cendant's Travelport will be used to cut debt at the Realogy Corp. and Wyndham Worldwide Corp. divisions, the New York-based company said yesterday in a statement.

Chief Executive Officer Henry R. Silverman, 65, built Cendant through acquisitions that included Avis and the Days Inn hotel chain. He will head one of the spinoffs, the Realogy real estate company, through Jan. 1, 2008. With the sale of the Travelport unit, the company now expects to issue shares of Realogy and hotel operator Wyndham to stockholders in late July.

"This is a positive for Cendant because this unit has been responsible for much of the earnings shortfalls and lowering of estimates recently," said Thomas McIntyre, who oversees $115 million including 427,576 Cendant shares at McIntyre, Freedman & Flynn in Orleans, Mass.

The sale "is getting done for the price range that people had believed it would get done, which is good news."

After the Travelport sale, debt at Realogy will be cut to $750 million and reduced to $600 million at Wyndham, Cendant said.

At the time of the spinoffs, Silverman will be paid $21.7 million under a separation agreement with Cendant, the company said in a regulatory filing. He will also receive a pro rata bonus for 2006 of about $6.6 million.

Richard Smith, head of Cendant's real estate services division, will become CEO of Realogy when Silverman leaves at the end of 2007.

The company plans to keep the Avis and Budget car-rental divisions and rename the combined unit Avis Budget Group Inc.

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