HOTEL, car rental giant Cendant to buy discount airfare firm Cheap Tickets for $425 million
Monday, August 13th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Hotel, real estate and car rental giant Cendant Corp. agreed Monday to buy the discount airfare company Cheap Tickets Inc. for $425 million in cash.
The deal calls for New York-based Cendant, the owner of such chains as Days Inn and Avis, to pay $16.50 for all the outstanding shares of Honolulu-based Cheap Tickets, or 39 percent more than the closing price of its stock Friday.
The transaction is expected to be completed sometime in the fall, barring any regulatory intervention.
Shares of Cheap Tickets rose $4.47, or 38 percent, to $16.32 in morning trading on the Nasdaq Stock Market. Cendant's stock rose 5 cents to $19.25 on the New York Stock Exchange.
In June, Cendant said it would pay $3.3 billion for Galileo International Inc., which books nearly one-third of the world's travel reservations over its electronic network. The deal remains in flux, though, as U.S. and European regulators investigate the merger for possible antitrust violations.
The purchase of Galileo raised concerns that Cendant could distort the powerful distribution system to favor its own properties and use it to gain sensitive information about its competitors. Cendant has denied any intention to do so.
Cendant 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.
Cheap Tickets, founded in 1986, has contracts with dozens of airlines to sell non-published fares over the phone and Internet and provides similar services for hotels, car rental agencies and cruise companies. It has about 1,000 employees.
Cendant, which has 28,000 employees, had net income of $602 million in 2000.