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Cendant buys RAC
May 21, 1998: 10:57 a.m. ET

Consumer services provider agrees to acquire UK auto club unit for $730M
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NEW YORK (CNNfn) - Cendant Corp. said Thursday it has reached definitive agreements to acquire the unit of Britain's Royal Automobile Club that offers roadside assistance to members.
     Cendant, which provides marketing, travel and real estate services, will pay $730 million cash for RAC Motoring Services.
     The acquisition is expected to contribute to per share earnings immediately.
     "We believe our offer represents outstanding value which no other acquirer could match," said Cendant Vice President Stephen P. Holmes. "The RAC, in partnership with Cendant, will bring substantial benefits to consumers. We are also pleased to make a contribution to the RAC Foundation, which will continue the important work of the RAC in public policy matters concerning motoring and the environment."
     Members of the Royal Automobile Club will meet June 19 to approve the first stage of the transaction.
     According to reports, Cendant was one of about six bidders for the RAC unit.
     Cendant, created last December by the merger of a hotel franchiser HFS Inc. and direct marketer CUC International, has been under intense investor scrutiny recently.
     Its stock lost nearly a third of its value at one point last month after the Parsippany, N.J.-based company discovered potential accounting irregularities at some former CUC business units.
     The company's stock (CD) has risen modestly since then from a 52-week low of 17. Cendant shares were trading up 9/16 at 22-5/16 early Thursday on the New York Stock Exchange Thursday.
     Cendant owns a number of hotel brands including Ramada and Howard Johnson and the Avis rental-car business. Back to top


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