Cendant Offers $935 Million in Effort to Buy Back Avis Group
NEW YORK — Franchising giant Cendant Corp. said Monday that it would pay $935 million for the 82% of rental car company Avis Group Holdings Inc. that it does not already own as part of a plan to reinvigorate itself through a renewed focus on the service sector.
The move represents a change in strategy for Cendant, which hopes to raise its market profile and stock price to levels seen before a 1998 merger and accounting scandal that led to the then-largest shareholder lawsuit in U.S. history.
The New York-based company agreed to pay $33 cash for each of the 25.6 million outstanding Avis shares, a sweetened deal from the $29 a share it offered in August. Avis rose $1.88 to close at $31.88 on the New York Stock Exchange.
Cendant purchased Garden City, N.Y.-based Avis in full in 1996, then sold off most of its interest the next year in a public stock offering. Cendant maintained the Avis trademark and Wizard reservation system.
Cendant Chief Executive Henry Silverman said the deal should immediately boost Cendant’s earnings.
“Our strategic objective is to reinvigorate both our top line and bottom line through organic growth and accretive acquisitions,†Silverman said, noting Cendant may look at deals for a second car-rental company.
Cendant also said that it expects fourth-quarter adjusted earnings to be in line with Wall Street targets at 18 cents a share, excluding results from online unit Move.com.
Cendant fell 50 cents to close at $11.50 on the NYSE.
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