Cendant Realigns, Sells Units
In a deal worth $5 billion, Cendant will sell its auto leasing and fleet-management unit and plans to shed several smaller subsidiaries.
Cendant said Avis Rent A Car will pay $1.44 billion in cash and $360 million in convertible preferred stock for the auto leasing and fleet management unit, which includes PHH Vehicle Avis.
Also included in the sale: Central Credit, Global Refund, North American Outdoor Group, Spark Services and NUMA. Green Flag, its UK roadside assistance unit, is also expected to be sold. Cendant will continue its focus on the Internet, according to reports.
Cendant intends to use proceeds from the sales to buy back its own stock. Last October, the company launched a $1 billion stock buyback plan.
The paring down of its operations comes a little more than one year after the company disclosed it had uncovered several years of widespread "accounting irregularities" at CUC International, which in 1997 merged with HFS Inc. to form Cendant.
As a result of the auto leasing deal, Cendant will record an after-tax gain of about $750 million, with total proceeds from the deal expected to total $1.7 billion, once taxes and expenses are deducted.