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Restructured Cendant to Retain Bulk of Operations in State

The real estate, hospitality and vehicle-rental companies are expected to stay in Parsippany.New Jersey seems to have gotten its fair share in the break-up of New York City-based Cendant (NYSE: CD). Details were announced today. Cendant’s board of directors approved a plan to separate the $20 billion company into four independent, publicly traded, pure-play businesses. The real estate, hospitality and vehicle-rental companies are expected to stay in Parsippany, where they are now located. Travel network will be headquartered at Cendant’s current New York City office.

The plan is designed to enable shareholders and the four companies to “unlock” Cendant’s value, which management says has not yet been fully recognized by the market, “despite the strong operating and financial performance of Cendant’s businesses.”

Following the proposed transaction, Cendant’s shareholders will own 100% of the equity in all four companies. The transaction is expected to be effected through three 100% spinoffs in the summer of 2006. It is expected to be tax-free for the company and its shareholders. Cendant shares traded at $17.98 in morning trades, down 12 cents from Friday’s close.

The Cendant name will be retired, but no new names have been selected yet for the new companies. No change in the location of the company’s workforce is anticipated.

Cendant’s vehicle-rental business, with 31,000 employees, owns the Avis Rent-a-Car and Budget Rent-a-Car brands. It has the biggest chunk of the workforce.

Cendant’s hospitality group has 19,000 employees. It is the world’s largest lodging franchiser with nearly 6,500 hotels under nine brand names including Wyndham, Ramada, Days Inn and Travelodge. It is also the world’s largest timeshare developer with more than 140 resorts throughout North America and the South Pacific.

The real estate group has 15,000 employees and brands including Century 21, Coldwell Banker and ERA. It is the largest franchiser of real estate brokerages with more than 14,000 offices and 300,000 sales associates worldwide.

Cendant’s travel network with 17,000 employees across 140 countries will be the only unit to be based in New York City.

The four new companies will be led by teams drawn from Cendant’s current senior leadership. Richard A. Smith will be CEO of Real Estate Services, with current Cendant chairman Henry Silverman serving as nonexecutive chairman. At the travel network, Silverman will serve as chairman and CEO, with Samuel L. Katz as vice chairman and president. The hospitality group will be headed by Stephen P. Holmes as chairman and CEO, while Ronald Nelson will lead vehicle-rental services as its chairman and CEO.

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