LONDON (CNNfn) - Cendant Corp., a U.S. travel and real-estate services company, completed its $4.5 billion divestiture program Friday with the sale of Greenflag, its U.K. roadside driver assistance unit, to a subsidiary of the Royal Bank of Scotland.
Direct Line, the U.K.'s leading direct-selling financial services company, will pay $410 million for Britain's third-largest roadside assistance company, leaving Cendant with a pre-tax gain of $40 million, the New York-based company said.
The deal, due to be completed by the end of the year, completes Cendant's year-long program of non-core asset sales. Total proceeds from the sale of 18 units have cut the company's debt by about $700 million and will leave it with some $900 million in cash.
The company also used some of the proceeds to finance the repurchase of about 150 million of its shares, or 18 percent of the total.
"In the fourth quarter of last year we embarked on a strategic program to divest non-core assets . . . I am pleased to say we have completed the task," Cendant Chairman, President and CEO Henry Silverman said.
Cendant was forced to pare back to its core travel and real-estate business after an investigation in April 1998 revealed huge accounting problems stemming from the merger that created the company.
Cendant bought Green Flag last year but decided to put it up for sale after U.K. regulators blocked its attempts to achieve critical mass by buying rival RAC as well.
The acquisition of Green Flag will give Direct Line a huge boost in its attempts to expand its own roadside assistance business, giving the financial services group about 15 percent of the market.