Cendant is breaking its business into four independent companies to boost its value for shareholders.
Under the plan, which was approved Sunday, the four divisions will include Cendant’s travel, real estate, hospitality and car rental businesses. Each unit will be created into a separate company. The divisions are slated to occur in summer 2006; Cendant shareholders will own equity in all four companies. The division is not expected to impact Cendant’s 82,000 employees.
The real estate division will include Century 21, Coldwell Banker, ERA and Sotheby’s International Realty; the hospitality company will consist of the Days Inn, Wyndham, Ramada, Howard Johnson, Travelodge, AmeriHost Inn, Knights Inn and Wingate Inn brands and vehicle rental division will retain Avis and Budget Rent-A-Car. Parsippany, NJ, will serve as the headquarters for the real estate, vehicle rental and hospitality companies. The travel network, which includes the Orbitz and Cheap Tickets online travel agencies, will remain at Cendant’s New York City headquarters.
The Cendant name will retire. No new names have yet been selected for the new companies.
Richard A. Smith will serve as CEO of real estate services, with Henry Silverman, Cendant’s CEO and chairman, as non-executive chairman. In the travel division, Silverman will act as chairman and CEO, with Samuel L. Katz as vice chairman and president. Stephen P. Holmes will head the hospitality division as chairman and CEO and Ronald Nelson Cendant’s president and CFO will lead vehicle rental services as its chairman and CEO.
“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,” Silverman said in a statement. “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 recognized the value of the company.”
