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EU probes Cendant-Galileo
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August 1, 2001: 5:50 p.m. ET
Hotel franchiser still plans to close $2.9B Galileo buy in 3Q after Euro questions
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NEW YORK (CNNfn) - Cendant Corp. reiterated Wednesday that it still plans to close its $2.9 billion buy of travel reservation firm Galileo International Inc. in the third quarter.
The Galileo takeover has cleared U.S. regulators and Cendant is certain it can appropriately respond to questions from the European regulators, the company said Wednesday.
The European Commission requested information relating to relationship of Cendant's Avis unit and Avis Europe PLC, an independent firm that trades on the London Stock Exchange. European regulators declared Wednesday the application for antitrust clearance incomplete.
"We are confident we can respond promptly to any European Commission inquiries," Cendant Chairman, President and CEO Henry Silverman said. "Furthermore, we expect that any investigation by the Justice Department will have no impact on the timing of the Galileo transaction."
Euro regulators stopped the clock Wednesday after they determined that Cendant had not provided necessary information regarding the car rental sector in Europe.
Cendant maintained that it will not bias Galileo, or use any information it receives to favor any Cendant brand.
New York-based Cendant (CD: down $0.62 to $19.73, Research, Estimates), the company that owns the Avis rental car and Howard Johnson hotel brands, said it expects the EC to declare notification to it complete when it supplies that information within the next few days. The one-month period review by the EC is also expected to be reinstated at that time.
In June, Cendant agreed to buy Rosemont, Ill.-based Galileo $2.9 billion in cash and stock in a bid to expand into the electronic travel reservation business.
The U.S. Justice Department, after allowing the deal to go ahead last month, has reopened its investigation to address new concerns raised by rivals.
While the deal is viewed favorably by investors, questions have been raised by rivals such as Marriott International Inc. about whether Cendant could use its control of Galileo to favor its own operations
Galileo (GLC: down $1.48 to $31.76, Research, Estimates) boasts access to more than 500 airlines, 40 car rental companies and 45,000 hotel properties worldwide. While it has made significant strides in developing its overseas capabilities, the company has lost ground in the U.S. domestic market. It also owns Trip.com, where consumers can book hotel rooms, airline tickets and car rentals. 
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