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Cendant exiting software
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November 20, 1998: 1:59 p.m. ET
France's Havas group pays up to $1B for U.S. consumer program leader
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LONDON (CNNfn) - Cendant Corp. has confirmed it will sell its consumer software unit to French media group Havas for up to $1 billion.
The initial deal price is $800 million but a contingency could add $200 million to the final price.
It will give Havas and its parent Vivendi (PA:PEX) control of a company which is a world leader in games software, second in educational software and third in lifestyle software, Vivendi said.
Vivendi shares leaped almost 3.50 percent to 1,364 francs in morning trade on the news.
Havas will also sell off a billboard advertising business. The net effect of the two deals will raise Havas' input to Vivendi's profit next year, the parent said.
Cendant (CD), formed by the merger late last year of HFS and CUC International, has been struggling to turn its financial situation around since it discovered accounting irregularities last spring.
In October, the company ditched a $3.1 billion acquisition of American Bankers Insurance Group Inc. and said it would concentrate on its core operations, which includes real estate brands including Century 21 and Coldwell Banker, as well as hospitality operations including Days Inn, Howard Johnson and Ramada hotel chains.
Cendant's consumer software business includes Sierra On-Line, maker of popular computer games including Phantasmagoria, the King's Quest and the Leisure Suit Larry series, as well as educational and entertainment software companies Davidson & Associates and Knowledge Adventure.
Cendant had announced its intentions to sell the unit about a month ago.
Vivendi operates in three major sectors -- utilities, communications and property and construction. Havas, part of the media group, primarily publishes encyclopedias and dictionaries and has a growing library of CD-ROM products.
Havas is counting on the acquisition of Cendant's consumer software business to boost its presence in the United States.
"This market is expanding," Havas chief executive Eric Licoys told CNNfn. "It's expanding in the United States… [but] there's probably more of a future in Europe for the development of that market. I speak of 15 percent growth per year in the U.S. compared to 25 percent per year in Europe, so it's very attractive."
Licoys also noted that Havas had considered Cendant's accounting problems, but that the company doesn't anticipate any stumbling blocks in completing the acquisition.
"We have had negotiations which I've found very fair with them and very frank and open," he said. "We will, of course, have a second review at the time of the closing, but I'm confident that the company is healthy and I'm very impressed by the quality of the management." 
-- from staff and wire reports
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