Strategy

Cendant Corp to separate into four companies

EH Staff - Mumbai

Cendant Corporation has announced its plans to separate Cendant into four independent, publicly traded, pure-play companies. The four companies would be real estate, travel distribution, hospitality and vehicle rental businesses.

The plan is designed to enable shareholders and the four companies to realise Cendant's value, which has not yet been fully recognised by the market, despite the strong operating and financial performance of Cendant's businesses.

Following the proposed transaction, Cendant's shareholders will own 100 per cent of the equity in all four companies. The transaction is expected to take place through three 100 per cent spin-offs in mid-2006. It is expected to be tax-free for the company and its shareholders.

Cendant's chairman and CEO, Henry R Silverman, said, "We believe that this is the right thing to do, for the right reasons and at the right time. Creating four strong and focused pure-play companies is the best way to unlock the full value of Cendant's businesses for the benefit of our shareholders in both the short and long term. All of our businesses have done well, yet despite Cendant's consistently strong operating and financial performance in recent years, the market has not fully recognised its value. Our successful efforts to simplify Cendant's structure and divest non-core businesses have underscored the benefits of greater clarity and focus. With these efforts complete, we have now concluded that it is in the best interests of our shareholders to establish pure-play enterprises, as we and our advisors believe the sum of the parts has a value in excess of our current share price."

Cendant anticipates that the separation of the company's core businesses will facilitate a clearer understanding and fairer market valuation of each of these businesses. The transaction is intended to reduce the complexity surrounding investor understanding and analysis of Cendant's businesses and enable them to choose how to diversify their holdings. Cendant also expects to attract new interest from investors who want to own stock in one or more of the separate companies, even though they might not have been as interested in its diversified holdings as a single company.