Travel, real-estate giant Cendant to split into four companies

Monday, October 24th 2005, 8:23 am

By: News On 6

NEW YORK (AP) _ Cendant Corp., the $20 billion-a-year company that owns the Orbitz travel Web site and several hotel and real-estate brands, will split itself into four separate public companies, the conglomerate said Monday.

The split, which was approved over the weekend by the company's board of directors, will occur next summer when Cendant spins off 100 percent of the equity of the three new companies to its shareholders.

One of the new companies will take over Cendant's hospitality businesses, including the Ramada and Howard Johnson brands. Each of the other three will also focus on a single area: real estate, travel booking or car rentals.

The company's leadership is hoping the change will bring value to its shareholders.

``We and our advisers believe the sum of the parts has a value in excess of our current share price,'' company Chairman and Chief Executive Officer Henry R. Silverman said in a news release. The company's shares closed Friday at $20.09, and have traded in a 52-week range between $19.04 and $23.58

Of the four companies to be created from Cendant's holdings, the one focusing on real-estate services will take with it the largest share of the conglomerate's revenue _ about 40 percent.

That company, which will include the Century 21 and Coldwell Banker brands, will be headed by Richard A. Smith, who already leads Cendant's real-estate services division, as CEO. Silverman will serve as non-executive chairman.

Stephen P. Holmes will become chairman and CEO of Cendant's hospitality services division. Silverman will become chairman and CEO of the new travel company, which will include Orbitz and other businesses.

Cendant's president and chief financial officer, Ronald L. Nelson, will become chairman and CEO of the vehicle-rental business, which will include the Avis and Budget Rent A Car brands.

New York-based Cendant was expected to report its third-quarter results later Monday. The company posted $2.1 billion in net income on $19.8 billion in revenue in 2004.

The conglomerate has been working for more than a year to shed holdings that did not fit easily into real estate and travel-related categories _ divesting itself of its tax preparation, mortgage and fleet management businesses, among others.

In 1998, allegations of accounting fraud at Cendant were among the first in a wave of scandals to spark outrage among investors in recent years. When the fraud was revealed, Cendant's market value plummeted by $14 billion in one day

In August, former Cendant Vice Chairman E. Kirk Shelton was sentenced to 10 years in prison and ordered to pay $3.27 billion to Cendant for inflating revenue by $500 million at Cendant's predecessor, CUC International, to drive up the stock price.

With the breakup announced Monday, Cendant joins several large corporations that have recently trimmed their holdings in bids to capture investor attention.

Viacom Inc., the media conglomerate that owns CBS and MTV, announced plans earlier this year to split its holdings into two companies, one focusing on broadcast television and the other on cable networks.

Internet conglomerate IAC/InterActiveCorp also has been simplifying its profile, spinning off travel sites including Expedia.com, a rival of Cendant's Orbitz.