|
Cendant takes off with Avis
|
 |
November 13, 2000: 5:51 p.m. ET
World's No. 2 car rental company to unite with largest shareholder for $935M
|
NEW YORK (CNNfn) - After nearly three months of deliberation, Avis Group Holdings Inc. agreed to a sweetened $935 million buyout offer from Cendant Corp. Monday, reuniting the world's No. 2 car rental company with its former parent.
Garden City, N.Y.-based Avis said its board accepted Cendant's offer to purchase the 25.6 million shares it did not already own for $33 per share in cash after a lengthy review of the bid by a committee of independent directors.
The final transaction price was a slight increase from Cendant's original $29 a share cash bid -- a proposal many industry analysts immediately derided as too low.
Cendant (CD: Research, Estimates), which already owns approximately 18 percent of Avis Group's outstanding shares, said the merger would immediately add to the company's earnings.
Avis (AVI: Research, Estimates) shares climbed $1.88 to $31.88 Monday, while Cendant shed 50 cents to $11.50.
 New York-based Cendant, which owns the brand names for such diverse franchises as Days Inn and Ramada hotels to Century 21 and Coldwell Banker real estate agencies, spun off Avis Group in 1997 and later sold the company its 700,000-vehicle fleet management business for $1.8 billion.
"I think it's a win-win for both compaies," Avis Group Chairman A. Barry Rand told CNNfn. "It's accretive for Cendant and they have travel assets that we believe can levarage the Avis brand for them."
Rand said the price was very good and bringing the franchise and the brand back together will help the company.
Cendant's comeback
The sale of Avis was part of Cendant's concerted effort to sell off all but its most valuable brand names to help clean up its balance sheet in the wake of accounting irregularities that dated back to 1997. In addition to the $1.8 billion in cash it received from the fleet management sale, it also removed more than $4 billion in debt from its portfolio, debt it will largely assume again under Monday's transaction.
Now, the company has seemingly reversed course again, looking to beef up its worldwide empire. Still, company officials said the Avis deal would have no adverse impact on its balance sheet.
Rand told CNNfn Avis will pay down $1 billion worth of debt with this transaction.
Including the financial benefits obtained from the Avis buyout and the acquisition of resort operator Fairchild Communities earlier this month for $635 million, Cendant is now projecting 2001 earnings of 91 cents per share and 2002 profits of $1.06.
Its 2001 earnings, which would actually be only a 1 cent increase from the 90 cents per share it expected to earn year earlier, will be hurt by incremental interest from a common stock class settlement stemming from the 1997 accounting irregularities, the company said. 
|
|
|
|
|
|
Cendant Corp.
Avis
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
