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News > Deals
Cheap tickets sold
August 13, 2001: 12:57 p.m. ET

Cendant to pay $425M cash for online travel site, a 39% premium
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NEW YORK (CNNfn) - Cendant Corp. said Monday it will acquire Cheap Tickets Inc. in a cash deal worth about $425 million.

News of the deal sent shares of Cheap Tickets (CTIX: up $4.49 to $16.34, Research, Estimates), which sells airline tickets primarily by phone and on the Internet, nearly 38 percent higher in early afternoon trading Monday. Shares of Cendant (CD: up $0.15 to $19.35, Research, Estimates) were little changed.

Under the terms of the deal, which was announced before the U.S. markets opened, Cendant, a diversified holding company whose franchises include the Ramada and Days Inn hotel chains and Avis rental car agency, said it will purchase all of Cheap Tickets' common stock for $16.50 a share, which represents a 39.2 percent premium over Friday closing price of $11.85.

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Based in Honolulu, Cheap Tickets sells airline tickets primarily by phone and on the Internet through its Web site, cheaptickets.com, and operates 10 retail outlets. The company buys non-published air fares through contracts with some 40 air carriers and sells them at a discount to the public.

Cheap Tickets also covers domestic and international air routes, offering more than 1 million non-published fares. It also sells published air fares and has contracts with cruise lines, hotels, and car rental agencies to provide similar services.

For the six months ended June 1, Cheap Tickets logged total revenue of $53.4 million, a 5 percent increase over the same period a year earlier. During the same period, the company's net income fell 67 percent to $2.4 million.

Cendant, which is based in New York City, logged total revenue of $3.89 billion for the six months ended June 30, a 72 percent increase over the same period a year earlier, while its net income rose 72 percent to $519 million.

Executives of Cendant, which has been building on its travel services business – including a deal to buy electronic reservation service Galileo International (GLC: up $0.07 to $31.71, Research, Estimates) – for $3.3 billion – said the Cheap Tickets buy will add 1 or 2 cents a share to fiscal 2002 earnings and about 3 cents a share to 2003 earnings.

"The acquisition of Cheap Tickets supports our strategy of further penetrating the fee-for-service components of the travel industry," Cendant CEO Henry Silverman said. " Furthermore, this transaction is consistent with Cendant's strategy of making accretive acquisitions within our core business areas and competencies."

Cendant executives also said they expects the Cheap Tickets acquisition to boost the company's soon-to-be-launched Travel Portal Inc., an online travel booking service.

In June, Cendant said it would pay $2.9 billion for Galileo International, which books nearly one third of the world's travel reservations over its electronic network, or global distribution system. The deal remains in flux, though, as U.S. and European regulators investigate the merger for possible antitrust violations.

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Regulators are concerned that Cendant could use the powerful distribution system to favor its own properties and use it to gain sensitive information about competitors. Cendant has denied any intentions to do so and earlier this month said it still expects to close that deal in the current quarter.

Cendant said it plans to begin a tender offer for Cheap Tickets' shares within 10 days. The company said it also will obtain $145 million in cash or cash equivalents as part of the deal, lowering Cendant's net cash outlay for Cheap Tickets to about $280 million.

The Cheap Tickets deal is expected to close this fall, Cendant said. graphic

  RELATED STORIES

Cendant raises 3Q, full-year outlook - Aug. 9, 2001

Cendant to buy Galileo for $2.9B - June 18, 2001

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.