A Blackstone Group affiliate will acquire Cendant’s travel distribution services division Travelport for $4.3 billion (€3.4 billion) in cash, Cendant announced on Friday.
Cendant will use the cash to help reduce the debt of Cendant’s Realogy real-estate division and Wyndham hotel division, both of which the company is planning to spin off in July. The sell-off is part of a larger Cendant plan, announced last October, to separate Cendant into four independent, publicly traded companies—one for each of Cendant’s real-estate, travel distribution, hotel, and vehicle rental businesses.
Cendant, which in recent years grew into a $16 billion corporation due in large part to acquisitions—including the 2004 purchases of the Ramada hotel chain and the Orbitz online travel Web site—is still recovering from a major accounting scandal in 1998, revealed shortly after the company was created by the merger of CUC International and HFS the previous year. Since then, the company’s travel division, in particular, has been hit hard: the subsidiary reported a 79 percent drop in EBITDA for 2005, and the company ousted Samuel L. Katz as the travel division’s head in December. The downturn is likely due in part to the fact that an increasing number of airlines and hotels now handle their bookings in-house.
The Blackstone Group has raised about $59 billion since its formation in 1985, $27 billion of which has been for private equity investing. The Cendant transaction is expected to close in August.
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