Cendant

Source: Wikipedia, the free encyclopedia.
Cendant Corporation
FormerlyHospitality Franchise Systems
Company typePublic
NYSE: CD
IndustryBusiness and consumer services
FoundedDecember 18, 1997; 27 years ago (1997-12-18) (as Cendant Corporation)
Defunct2006 (2006)
FateRenamed as Avis Budget Group after divestiture of real estate, travel and hotel divisions
SuccessorAvis Budget Group
Headquarters
New York City
,
United States
Key people
Henry R. Silverman (CEO)
Websitecendant.com

Cendant Corporation was an American provider of business and consumer services, primarily within the real estate and travel industries. In 2005 and 2006, it broke up and spun off or sold its constituent businesses. Although it was based in

Parsippany-Troy Hills, New Jersey
.

Its last CEO was Henry Silverman.

History

Founding

Hospitality Franchise Systems Inc. (HFS) was created as an affiliate of the

Blackstone Group, a private equity firm, as a vehicle to acquire hotel franchises.[1] It was led by Henry Silverman, a Blackstone partner and former CEO of Days Inn.[2] It began in 1990 by buying Howard Johnson's and the U.S. rights to the Ramada brand from Prime Motor Inns for $170 million.[2][3] In 1992, HFS bought the Days Inn franchise out of bankruptcy for $290 million.[4] This purchase made HFS the largest hotel franchisor in the world, with its brands licensed to 2,300 hotels.[5]

Blackstone took Hospitality Franchise Systems public in a December 1992 IPO.[6] HFS was among the fastest growing companies of its size in the 1990s and the company's stock rose from its IPO price of $4 per share to $77 per share in 1998.

In 1993, HFS purchased the

Wingate Inn.[11]

After company management found that they had mostly exhausted the field of desirable acquisition targets in the hotel industry, Hospitality Franchise Systems expanded into the real estate business.

Electronic Realty Associates for $37 million,[16] and Coldwell Banker for $740 million, making HFS the largest franchisor of real estate brokerages in the U.S.[17]

In 1996, HFS acquired the

Resort Condominiums International, a timeshare exchange service, for up to $825 million.[22][23]

In 1997, HFS acquired

relocation services, and fleet management were expected to synergize with HFS's real estate and car rental businesses.[25]

However, later that year, Silverman led HFS into what would prove a disastrous merger with CUC International, a direct marketing company that operated discount membership programs like Shoppers Advantage and Travelers Advantage. HFS and CUC combined in a "merger of equals" on December 18, 1997, to form Cendant Corporation.[26][27] As part of the merger, Silverman announced he would reduce his day-to-day involvement with the company and assume the company's chairmanship in preference of CUC's founder and CEO Walter Forbes.

In January 1998, Cendant purchased

tax preparation offices, for $480 million.[28][29]

Accounting scandal

Just months after the merger, in April 1998 Cendant uncovered massive accounting improprieties at CUC which resulted in one of the largest financial scandals of the 1990s. At the time, Vice Chairman E. Kirk Shelton was reported to have inflated the company's revenue by $500 million over a period of three years. He had reported a 1997 net income of $55.4 million when the true 1997 result was a net loss of $217.2 million. As these irregularities in the books of Cendant were discovered in early 1998, an audit committee set up by Cendant's Board of Directors launched an investigation and discovered that the former management team of CUC, including its top executives Walter Forbes and Kirk Shelton, had been fraudulently preparing false business statements for several years.[citation needed] When this report was released to the public, the resulting damage to the market value for the company was approximately $14 billion, with their stock tumbling from a high of $41 down to nearly $12. At the time, this fiasco was the largest case of accounting fraud in the country's history. After the accounting scandal was uncovered, Silverman and the Cendant board forced Forbes’ resignation and Silverman assumed the CEO post.

In March 2001, Forbes and Shelton were indicted by a federal grand jury and sued by the Securities and Exchange Commission, which accused the company of directing the massive accounting fraud that ultimately cost the company and its investors billions of dollars. Shelton served 8 of his 10-year prison sentence before being released early for exemplary behavior. Former CEO Walter Forbes was sentenced to 12 years in prison in 2007.

Under Silverman, Cendant bounced back from the accounting scandal far outperforming the markets in the early 2000s.

Post-scandal

Following the fraud debacle, Cendant began selling businesses to reduce its debt and repair the financial damage caused by the accounting scandal.

Sierra On-Line), to French publisher Havas for $770 million.[31][33]

By 2001, Cendant was again in acquisition mode.

Trendwest Resorts for $980 million.[43][44] In 2002, Cendant bought Budget Rent a Car out of bankruptcy for $110 million plus $2.8 billion in assumed debt.[45] The combination of Budget with Avis made Cendant the second-largest car rental company in the U.S.[45]

In 2004, Cendant began a series of moves to simplify its business and focus on its core areas of real estate and travel.[46]

As part of this strategy, several non-core businesses were sold or spun off. In June 2004, Cendant sold Jackson Hewitt for $638 million through an initial public offering.

Apollo Management, for $1.8 billion.[51][52]

Meanwhile, proceeds from these sales were used for acquisitions to expand Cendant's core businesses. In November 2004, Cendant purchased

Wyndham hotel brand from Blackstone for $111 million.[61][62]

Breakup

On October 23, 2005, Cendant's strategy of simplification culminated in the announcement that it would split into four separate companies, focused respectively on hotels, real estate, travel services, and rental cars.[63] Silverman said the breakup would improve shareholder value by allowing the market to better recognize the value of Cendant's component businesses.[64]

Cendant originally planned to spin off its travel services division to shareholders as a company named Travelport, but on June 30, 2006, Cendant announced it would sell Travelport to Blackstone for $4.3 billion.[65]

On July 31, 2006, Cendant's real estate and hotel divisions were spun off and became separate companies under the names

Wyndham Worldwide, respectively.[66][67]

The sale of Travelport to Blackstone was completed on August 23, 2006.[68] This left Cendant with only its car rental business, comprising Avis, Budget Rent a Car, and Budget Truck Rental. The company retired the Cendant name and renamed itself to Avis Budget Group on September 1, 2006.[69][70]

Former brands

Automobile rentals

Cendant owned the rental brands of

NASDAQ
stock exchange under the ticker symbol CAR.

Hotel franchises

These brands were spun off into Wyndham Worldwide.

Real estate franchises

These companies are now under the

Realogy
banner.

Membership programs

These companies are now under the Affinion Group banner.

  • CUC International (Comp-U-Card)
  • Shopper's Advantage
  • AutoVantage
  • Traveler's Advantage
  • Buyer's Advantage
  • NetMarket
  • PrivacyGuard

Travel services

These brands were separated into a new company called Travelport.

Timeshare companies

These companies are owned by Wyndham Worldwide.

Vacation network groups

See also

References

  1. ^ Iris Taylor (October 28, 1990). "Hospitality on the move". The Star-Ledger. Newark, NJ – via NewsBank.
  2. ^ a b Iris Taylor (June 14, 1990). "Prime Motor to sell 2 hotel franchises". The Star-Ledger. Newark, NJ – via NewsBank.
  3. ^ Joseph Woelfel (July 3, 1990). "Hotelier braces for loss". The Record. Hackensack, NJ – via NewsBank.
  4. ^ "Sale of Days Inns hotel chain franchise business completed". The Gazette. Cedar Rapids, IA. AP. February 2, 1992 – via NewsBank.
  5. ^ "Takeover of Days Inn would create world's biggest hotel franchiser". Houston Chronicle. Reuters. October 1, 1991 – via NewsBank.
  6. ^ "Hospitality Franchise sells 6 million shares to public". The New York Times. December 10, 1992. Retrieved 2020-11-15.
  7. ^ "Super 8 deal is done". The Star-Ledger. Newark, NJ. May 4, 1993 – via NewsBank.
  8. ^ Marilee Loboda Braue (February 17, 1993). "Hotel giant makes room for one more". The Record. Hackensack, NJ – via NewsBank.
  9. ^ Beth Fitzgerald (June 29, 1993). "Hospitality Franchise purchases Park Inn, has plans for Days Inn-type". The Star-Ledger. Newark, NJ – via NewsBank.
  10. ^ "Hospitality Franchise: Sees trading symbol of 'NAGC'". Dow Jones News Service. November 10, 1994.  – via Factiva (subscription required)
  11. ^ Stephen G. Hirsch (April 27, 1995). "A hotel window of opportunity". The Record. Hackensack, NJ – via NewsBank.
  12. ^ Mark Lowery (June 30, 1996). "HFS gobbling up the competition". The Record. Hackensack, NJ – via NewsBank.
  13. ^ a b Edwin McDowell (January 4, 1996). "HFS is a fast-moving company whose share price has soared". The New York Times. Retrieved 2020-11-27.
  14. ^ David Klein (September 29, 1995). "HFS shakes up Century 21". The Star-Ledger. Newark, NJ – via NewsBank.
  15. ^ Donna Rosato (December 7, 1995). "Hotel franchiser books success". USA Today – via NewsBank.
  16. ^ Beth W. Orenstein (February 18, 1996). "HFS buys Century 21, ERA but realtors expect little change". The Morning Call. Allentown, PA – via NewsBank.
  17. ^ Robert Keefe (June 1, 1996). "Coldwell Banker now part of HFS". Tampa Bay Times – via NewsBank.
  18. ^ Edwin McDowell (July 2, 1996). "HFS will acquire employee-controlled Avis for $800 million in cash and stock". The New York Times. Retrieved 2020-11-22.
  19. ^ "HFS completes purchase of Avis". Sun Sentinel. Fort Lauderdale, FL. Bloomberg. October 18, 1996 – via NewsBank.
  20. ^ "Avis shares hit the Street jumping". The Baltimore Sun. Bloomberg. September 25, 1997. Retrieved 2020-11-22.
  21. ^ Don Stancavish (July 2, 1996). "Avis to join HFS fold". The Record. Hackensack, NJ – via NewsBank.
  22. ^ Mark Lowery (October 8, 1996). "HFS buys time-share firm". The Record. Hackensack, NJ – via NewsBank.
  23. ^ "HFS acquisition". The Star-Ledger. Newark, NJ. November 13, 1996 – via NewsBank.
  24. ^ Sean Somerville (May 1, 1997). "Sale of PHH to HFS OK'd too fast for tears". The Baltimore Sun – via NewsBank.
  25. ^ Sean Somerville (February 16, 1997). "Little guy grows fast". The Baltimore Sun – via NewsBank.
  26. ^ Mark Lowery (May 28, 1997). "$10.9B 'merger of equals': HFS hooks up with CUC". The Record. Hackensack, NJ – via NewsBank.
  27. ^ Beth Fitzgerald (December 19, 1997). "Merged partners adopt new name". The Star-Ledger. Newark, NJ – via NewsBank.
  28. ^ Tom Shean (January 7, 1998). "Jackson Hewitt sale is nearly complete". The Virginian-Pilot. Norfolk, VA – via NewsBank.
  29. ^ "Jackson Hewitt deal complete". The Virginian-Pilot. Norfolk, VA. January 9, 1998 – via NewsBank.
  30. ^ John T. Ward (May 25, 1999). "Cendant trims the fat by selling car business". The Star-Ledger. Newark, NJ – via NewsBank.
  31. ^ a b Form 10-K: Annual Report (Report). Cendant Corporation. March 1, 2000. pp. 33–34 – via EDGAR.
  32. ^ John T. Ward (August 13, 1998). "Cendant showing promised restraint". The Star-Ledger. Newark, NJ – via NewsBank.
  33. ^ Melissa Pozsgay (November 21, 1998). "Vivendi buys Torrance software unit". Daily Breeze. Torrance, CA – via NewsBank.
  34. ^ Howard Wolinsky (June 8, 2001). "Galileo travel company in talks to be bought". Chicago Sun-Times – via NewsBank.
  35. ^ "Cendant takes off with Avis". CNN Money. November 13, 2000. Retrieved 2020-11-22.
  36. ^ "Cendant completes acquisition of Avis Group Holdings, Inc" (Press release). Cendant Corporation. March 1, 2001 – via EDGAR.
  37. ^ Greg Griffin (June 24, 2001). "Cendant to propel Denver's Trip.com". The Denver Post – via NewsBank.
  38. ^ "Cendant completes Galileo buy". Rocky Mountain News. October 2, 2001 – via NewsBank.
  39. ^ Russ Lynch (October 9, 2001). "Cheap Tickets exec gets new post". Honolulu Star-Bulletin – via NewsBank.
  40. ^ Russ Lynch (October 8, 2001). "Cendant closes offer for Cheap Tickets". Honolulu Star-Bulletin – via NewsBank.
  41. ^ "Cendant to buy No. 1 operator of timeshares". The Baltimore Sun. Bloomberg. November 3, 2000. Retrieved 2020-11-28.
  42. ^ Jim Lovel (April 12, 2001). "LR office of Fairfield set to clos". Arkansas Democrat-Gazette – via NewsBank.
  43. ^ Form 10-K: Annual Report (Report). Cendant Corporation. March 5, 2003. p. 14 – via EDGAR.
  44. ^ Robert Burgess (April 2, 2002). "Cendant acquiring Trendwest". The Seattle Times. Bloomberg – via NewsBank.
  45. ^ a b Thomas S. Brown (November 26, 2002). "Cendant adds Budget to fold". The Daytona Beach News-Journal – via NewsBank.
  46. ^ Kevin G. DeMarrais (November 24, 2004). "Cendant spinoff could yield $1B". The Record. Hackensack, NJ – via NewsBank.
  47. ^ Raymond Hennessey (June 23, 2004). "Jackson Hewitt inches up after first day on markets". The Press of Atlantic City. Dow Jones – via NewsBank.
  48. ^ Teresa M. McAleavy (February 2, 2005). "Cendant completes its spinoff of PHH Corp". The Record. Hackensack, NJ – via NewsBank.
  49. ^ "PHH Corporation completes spin-off from Cendant Corporation" (Press release). PHH Corporation. January 31, 2005 – via EDGAR.
  50. ^ Matt Wickenheiser (February 17, 2005). "Wright Express offering seen as good for Maine". Portland Press Herald – via NewsBank.
  51. ^ Rob Varnon (July 27, 2005). "Cendant divisions to be sold". Connecticut Post – via NewsBank.
  52. ^ Form 10-K: Annual Report (Report). Affinion Group. March 23, 2007. p. 40 – via EDGAR.
  53. ^ Kathy Bergen (September 30, 2004). "Cendant to buy No. 3 Web travel firm". Baltimore Sun. Retrieved 2020-11-21.
  54. ^ "Cendant Corporation completes acquisition of Orbitz, Inc" (Press release). Cendant Corporation. November 12, 2004 – via EDGAR.
  55. ^ Kevin G. DeMarrais (September 16, 2004). "Agreement would give Cendant full control over Ramada brand". The Record. Hackensack, NJ – via NewsBank.
  56. ^ "Cendant Hotel Group completes acquisition of Ramada International" (Press release). Marriott International. December 10, 2004 – via HospitalityNet.
  57. ^ Form 10-K: Annual Report (Report). Cendant Corporation. March 1, 2005. p. 19 – via EDGAR.
  58. ^ "Cendant gets British travel site". The Star-Ledger. Newark, NJ. December 3, 2004 – via NewsBank.
  59. ^ "Cendant acquires U.K. travel firm". The Record. Hackensack, NJ. April 2, 2005 – via NewsBank.
  60. ^ "Cendant Corporation acquires Gullivers Travel Associates And OctopusTravel.com" (Press release). Cendant Corporation. December 16, 2004 – via EDGAR.
  61. ^ Form 10-K: Annual Report (Report). Cendant Corporation. March 1, 2006. p. F-24 – via EDGAR.
  62. ^ Jerry W. Jackson (September 15, 2005). "Cendant acquires Wyndham brand". The Orlando Sentinel – via NewsBank.
  63. ^ Ellen Simon (October 24, 2005). "Travel, real-estate giant Cendant to split into four companies". Associated Press – via NewsBank.
  64. ^ Joseph R. Perone (October 25, 2005). "Investors skeptical about Cendant spinoffs". The Star-Ledger. Newark, NJ – via NewsBank.
  65. ^ Claudia H. Deutsch (July 1, 2006). "Blackstone plans to acquire Cendant travel services unit". The New York Times. Retrieved 2020-11-15.
  66. ^ "Cendant Corporation completes spin-offs of Realogy Corporation and Wyndham Worldwide Corporation" (Press release). Cendant Corporation. July 31, 2006 – via EDGAR.
  67. ^ Joseph R. Perone (August 1, 2006). "Cendant's split into 4 firms effective today". The Star-Ledger. Newark, NJ – via NewsBank.
  68. ^ "Blackstone Group completes acquisition of Cendant's Travelport subsidiary" (Press release). The Blackstone Group. August 23, 2006. Retrieved 2020-11-15.
  69. ^ Form 8-K: Current Report (Report). Avis Budget Group. September 5, 2006 – via EDGAR.
  70. ^ Kaja Whitehouse (August 30, 2006). "Cendant changes wrapped up at tense meeting". The Star-Ledger. Newark, NJ. Dow Jones – via NewsBank.
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