Cendant Corporation was a New York-based provider of business and consumer services, primarily within the real estate and travel industries. In 2005 and 2006, Cendant broke up and spun off or sold its constituent businesses. Although the company was based in New York City, the majority of Cendant's headquarters employees were located in Parsippany-Troy Hills, New Jersey.
The last CEO of Cendant was Henry Silverman.
History
Founding
Henry Silverman, a business executive and private equity investor created Hospitality Franchise Systems (HFS) as a vehicle to acquire a number of hotel franchises in the early 1990s. Among Silverman’s purchases were such brands as Ramada and Howard Johnson's as well as Days Inn, which he was able to buy for $290 million (less than half what he had sold it for) after the company had filed for bankruptcy in 1991. Silverman quickly took Hospitality Franchise Systems public in a 1992 IPO.
HFS was among the fastest growing companies of its size in the 1990s and the company’s stock had risen from its IPO price of $4 per share to $77 per share by 1998. The company made a brief foray into the casino industry, but then spun off that business in November 1994 as National Gaming. In 1996, Cendant purchased Sierra On-Line and Davidson & Associates for $2.2 billion. In 1998 Cendant purchased the Jackson Hewitt tax preparation company (which was spun off as a separate company in 2004). However, in 1998, Henry Silverman led HFS into what would prove a disastrous merger with CUC International, a direct marketing company that operated Shoppers Advantage and Travelers Advantage (now part of Affinion Group). The $14 billion merger of HFS and CUC resulted in the formation of Cendant Corporation, which was formed in December 1997. Also, 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.
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. 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. Mr. 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, the entire interactive software branch was sold for $1 billion to French publisher Havas in 1998, the same year Havas was purchased by Vivendi.
Early in 2004, Cendant acquired the trademark rights to the Ramada brand in the United States, where there were 819 franchised properties. It also acquired the Canadian rights. On September 15, 2004, Cendant purchased the Ramada International Hotels & Resorts unit from Marriott International. At the time, this was primarily a franchised brand of 204 hotels operating in 26 countries and territories.
On September 29, 2004, Cendant purchased Orbitz for $1.2 billion.
In early 2005, Cendant purchased ebookers for just under £190 million. Later in the year, Cendant acquired London based Gullivers Travel Associates.
Breakup
On October 23, 2005, Cendant Corporation announced its decision to split into four separate companies, citing a necessity to diversify in appealing to stockholders and in an attempt to increase the value of the post-split up company. These four categories include "Real Estate, Travel Distribution, Hospitality and Vehicle Rental Companies."
Cendant originally decided to spin off its Travel Distribution division as a separate company called Travelport, but on June 30, 2006, Cendant announced the sale of Travelport to an affiliate of the privately held Blackstone Group for $4.3 Billion. This sale closed on August 23, 2006.
During the autumn of 2005, Progeny Marketing Innovations and Trilegiant were sold to private equity group Apollo Management. They changed their name in January 2006 to Affinion Group.
On July 31 of 2006, both the Cendant Real Estate division as well as the Cendant Hospitality division were spun off and became separate companies under the names Realogy and Wyndham Worldwide, respectively. Realogy was subsequently bought by Apollo.
The Cendant Car Rental Group, which owns Avis, Budget Rent A Car and Budget Truck Rental rental companies, became the sole remaining company under the Cendant name. The company changed its name to Avis Budget Group and the Cendant name has been completely retired.
Former shareholders of Cendant received as a dividend for each share of Cendant common stock held on the dividend distribution date 1/4 share of common stock of Realogy, 1/5 share of common stock of Wyndham Worldwide and the remaining shares were subject to a reverse split resulting in shareholders receiving 1 share of Avis Budget Group for each 10 shares of Cendant previously held.
Former brands
Automobile rentals
Cendant owned the rental brands of Avis and Budget, holding these properties in the CCRG (Cendant Car Rental Group). Avis and Budget operate a shared fleet of cars, and have the same "back end" system, but operate at different locations, offer different service levels, and have somewhat different pricing. After the Cendant name was dissolved, the car rental segment became known as Avis Budget Group and currently trades on the NASDAQ stock exchange under the ticker symbol CAR.
Hotel franchises
These brands were spun off into Wyndham Worldwide.
- AmeriHost Inn
- Baymont Inn & Suites
- Days Inn
- Days Inn China
- Hawthorn Suites by Wyndham
- Howard Johnson
- Knights Inn (includes Villager Inn, which was merged into Knights Inn in 2004)
- Ramada
- Ramada Asia-Pacific
- Super 8 Worldwide
- Travelodge
- Wingate Inn
- Wyndham Hotels & Resorts
Real estate franchises
These companies are now under the Realogy banner.
- Century 21 Real Estate
- Coldwell Banker
- Coldwell Banker Commercial
- ERA Real Estate
- Sotheby's International Realty
- Corcoran Group
- Citi-Habitats
- Better Homes & Gardens Realty
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.
- CheapTickets
- TripRewards
- HotelClub.com
- AoYou.com
- RatesToGo.com
- Galileo CRS
- Orbitz
- ebookers
- Lodging.com
- Asia-hotels.com
- Away.com
- travelbag.co.uk
- OctopusTravel.com
- Travelport.com
- Gta-travel.com (Gullivers Travel Associates)
- Trust International
These companies are owned by Wyndham Worldwide.
- Fairfield Resorts
- Trendwest Resorts
- Shell Vacation Club
Vacation network groups
- RCI
- Cuendet
- Landal GreenParks
- French Life
- Novasol
References
