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Cendant realigns assets
August 12, 1998: 3:36 p.m. ET

Troubled marketing firm sells classified ads unit; consumer software is next
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NEW YORK (CNNfn) - Cendant Corp. agreed to sell its Hebdo Mag International subsidiary to the management of the classified ads publisher and has hired an investment advisor to handle the sale of its entire consumer software business, the trouble-plagued company said Wednesday.
     The realignments come as the Parsippany, N.J.-based marketing concern tries to recover from accounting irregularities that already have brought scrutiny from investors and regulators alike and cost Cendant Chairman Walter Forbes and other executives their jobs.
     Cendant said it is now undertaking various strategic alternatives to enhance shareholder value by focusing on its business model.
     "We have no comparative advantages as owners or managers of Hebdo or our software businesses. Accordingly, we have determined these units do not fit within our future business model," said Henry R. Silverman, Cendant's president and chief executive who was elected last month to fill the chairman position.
     Since the scandal first erupted, Cendant's shares (CD) have lost more than 50 percent of their value. The stock rebounded 2-5/16 Wednesday to 16-7/16.
(Click to view recent stock activity)

     The buyers of Hebdo Mag International -- a worldwide publisher of classified ads in 14 countries -- have agreed to pay about 7 million shares of the Cendant stock they own and $410 million cash. Based on current trading prices, the deal is valued at about $525 million.
     Cendant said it expects the sale to generate an after-tax gain of more than $250 million. The sale of Hebdo will be neutral to 1998 earnings per share and will add 1 cent to 1999 earnings per share.
     Cendant will immediately classify Hebdo Mag and the consumer software businesses as discontinued operations.
     The transaction is expected to be completed in the fourth quarter, pending receipt of certain governmental approvals and financing.
     Meanwhile, Cendant said it has engaged Credit Suisse First Boston to analyze the third- party sale or initial public offering of its entire consumer software business unit.
     The business includes Knowledge Adventure, Blizzard Entertainment, Davidson & Associates and Sierra On-Line.
     Sierra and Davidson both were publicly traded until early 1996, when they were acquired for $2.2 billion by the company, then known as CUC International. CUC merged with HFS in December 1997 to create Cendant.
     Analysts have estimated the current total value of those two divisions to range from $1 billion to $1.5 billion.Back to top
     -- by staff writer Robert Liu


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