End of the road for Cendant
Cendant is to split into four separate companies, it revealed yesterday, as it also reported a slowdown in some of its leisure travel businesses.
The American owner of Avis, the car rental company, Ramada hotels, and ebookers, wants to split into four listed companies after seeing its shares decline 9 per cent this year.
Cendant plans to spin off its $21m (£11.8m) estate agency, travel distribution, hospitality and vehicle rental businesses in the belief that the sum of the businesses will be higher than the present conglomerate structure.
The Cendant name will disappear next year although the company has yet to decide on the individual names of the spun off businesses. They will by wholly owned by Cendant’s shareholders. Henry Silverman, chief executive, said: “All of our businesses have done well, yet despite Cendant’s consistently strong operating and financial performance of recent years, the market has not fully recognised the value of the company.”
He said that other options had been weighed up including the sale of one or all of the businesses. This has not been ruled out after the current plan is executed.
The company announced the plan at the same time as delivering a gloomy financial outlook.
Ronald Nelson, chief financial officer, said some travel businesses showed signs of slowing down in the third quarter, blaming an array of unhelpful factors from terrorism and hurricanes to higher gasoline prices.
It also said the slowdown in growth was because there was an ongoing shift of online business to companies supplying travel leisure services direct on the internet, and ongoing economic weakness in Europe. EBITDA for core divisions in 2006 would be 10 per cent rather than 19 per cent, it warned.
