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Cendant Secures $935M Deal for Avis

NEW YORK (AP) — Cendant Corp. announced a sweetened $935 million bid for the portion of Avis Group Holdings it does not already own.

The companies announced the deal Monday, three months after Cendant made an initial $750 million bid for the car rental company.

Cendant, which already owns 18 percent of Avis' outstanding common shares as well as the Avis trademark and Wizard reservation system, will pay $33 a share in cash for the remainder of the business. That represents a 10 percent premium over Avis' closing price Friday and a 25 percent increase over Cendant's previous offer.

``We expect this transaction to be immediately accretive to Cendant's earnings,'' Cendant Chairman and CEO Henry R. Silverman said in a written release. ``Additionally, we look forward to the combination with Avis Group to enhance both our off-line and online travel strategies.''

The deal, expected to close in the first quarter of 2001, will return Avis to Cendant's control. Cendant purchased Garden City, N.Y.-based Avis in full in 1996, then sold off most of its interest the following year in a public stock offering.

The Avis deal coincides with a number of other acquisitions by New York-based Cendant.

The company recently agreed to buy the AmeriHost hotel brand names and franchising rights for an undisclosed price. It also is paying $635 million for Fairfield Communities Inc., a developer and manager of time-share properties.

In addition, Cendant recently purchased Bradford & Bingley Relocation Services, a British firm, and Hamilton Watts International, an Australian relocation company.

The acquisitions follow two years of difficulties at Cendant, stemming from accounting irregularities that led to the largest-ever settlement in a shareholder class-action lawsuit. As it struggled, Cendant sold off many of its non-strategic assets.

From Avis' point of view, the deal was too good to pass up especially at a time when the stock market has been particularly volatile.

``If you put this deal in perspective of what's happening around us, I think you'll understand why shareholders believe they have received very good value,'' said A. Barry Rand, Avis' chairman and CEO.

The deal also makes sense because it reunites the Avis brand name with the company managing that business, said Robert P. Napoli, an analyst with ABN Amro in Chicago. But the driving factor is that Avis has been largely undervalued and Cendant's offer was too good to pass up, he said.

``Cendant is getting an excellent deal,'' Napoli said. ``I think the independent board (at Avis) made the decision that the deal is going to be done and I don't think shareholders, at this point, are going to prevent the deal from being done.''

Shares of Avis were up $1.88, or 6 percent, to $31.88 in Monday afternoon trading on the New York Stock Exchange. Cendant stock was off 56 cents, or 5 percent, at $11.44.

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