Cendant Corporation Agrees to Acquire Orbitz, Inc. for $ 1.25 Billion; $1.05 Billion Net of Acquired Cash
29 Setembro 2004 - 12:10PM
PR Newswire (US)
Cendant Corporation Agrees to Acquire Orbitz, Inc. for $ 1.25
Billion; $1.05 Billion Net of Acquired Cash Cendant to Acquire All
Orbitz Shares for $27.50 Per Share in Cash NEW YORK and CHICAGO,
Sept. 29 /PRNewswire-FirstCall/ -- Cendant Corporation (NYSE:CD)
and Orbitz, Inc. (NASDAQ:ORBZ) announced today that they have
reached a definitive agreement for the acquisition by Cendant of
all the shares of Orbitz for $27.50 per share in cash. The
transaction has a fully diluted equity value of approximately $1.25
billion. Orbitz is debt-free and, as of June 30, 2004, had
approximately $200 million of cash on hand. The transaction has
been approved by the boards of directors of both companies, but is
still subject to regulatory and other approvals. Under the terms of
the definitive agreement, a wholly-owned subsidiary of Cendant will
commence simultaneous cash tender offers to acquire all Orbitz
outstanding Class A and Class B shares at a price of $27.50 per
share. Following successful completion of the tender offers, any
remaining shares of Orbitz will be acquired in a cash merger at the
same price. "The addition of Orbitz and its outstanding management
team to our portfolio of travel distribution businesses immediately
places Cendant in a leading competitive position in the domestic
on-line travel distribution business. The transaction provides a
foundation for significant synergies in technology, fulfillment and
operations, which will allow both Orbitz and CheapTickets to
continue to aggressively market and promote their respective brands
while increasing profitability," said Samuel L. Katz, chairman and
CEO, Cendant Travel Distribution Services Division. "The
transaction expands the Travel Distribution Services Division's
distribution capabilities, providing more choices for consumers,
suppliers, corporations and travel agents. Our increased scale and
relevance, combined with the transaction synergies, will provide
considerable benefits to both customers and our shareholders." "The
Orbitz acquisition fits perfectly with Cendant's articulated goal
to be among the leaders in every business in which we participate,"
said Ronald L. Nelson, Cendant's Chief Financial Officer. "We will
use the proceeds from the sale of Jackson Hewitt, a non-core unit,
along with additional cash on hand, to acquire a strategic asset
with near and long-term growth opportunities. The transaction also
meets all of our previously defined acquisition parameters: it is
strategic to our Travel Distribution Services Division; it
substantially strengthens our competitive position by adding
management talent and enhancing our travel technology capabilities;
and it is accretive within the first year of the acquisition."
"This transaction will deliver immediate and substantial value to
all Orbitz shareholders," said Jeffrey Katz, chairman, president
and CEO of Orbitz (who is unrelated to Samuel L. Katz). "The
attractive premium reflects the quality and success of our unique
and profitable approach to online travel. Our employees, customers,
partners and suppliers will benefit from the greater resources and
opportunities afforded as part of a larger company. And we're
pleased that the consumer-friendly and supplier-friendly aspects of
the Orbitz model will go forward due to Cendant's agreement to
continue providing unbiased fare displays on Orbitz.com and to
maintain Orbitz Charter Associate and Supplier Link contracts
providing low distribution costs." Cendant intends to maintain both
the Orbitz and CheapTickets businesses as differentiated consumer
brands in the leisure travel sector. In the corporate travel
sector, customers will be able to choose between Travelport and
Orbitz for Business, using the best of what each brand has
developed. The integration plans anticipate that CheapTickets and
Travelport will combine their technology platforms and operations
to form a common platform with Orbitz, based in Chicago. The
transaction is expected to be completed in November. Assuming this
completion date, Cendant has estimated the following effects on its
future results. Amounts in millions, except per share amounts.
2004(a) 2005 2006 Orbitz net revenues $35.0 -- $40.0 $340.0 --
$380.0 $390.0 -- $430.0 Orbitz EBITDA(b) $8.0 -- $8.5 $61.0 --
$64.0 $77.0 -- $80.0 Incremental depreciation and
amortization(c)($16.0) -- ($14.0) ($49.0) -- ($42.0) $0.0 -- $0.0
Estimated synergies(d) $0.0 -- $0.0 $60.0 -- $70.0 $105.0 -- $135.0
Integration and other costs(e) ($27.0) -- ($23.0) ($25.0) --
($20.0) ($15.0) -- ($8.0) Incremental oper- ating income(f) ($35.0)
-- ($28.5) $47.0 -- $72.0 $167.0 -- $207.0 Incremental EPS(g)
($0.02) -- ($0.02) $0.00 -- $0.01 $0.07 -- $0.09 Incremental net
cash provided by (used in) opera- ting activities ($5.0) -- $0.0
$100.0 -- $120.0 $190.0 -- $235.0 Incremental cap- ital expen-
ditures ($6.0) -- ($6.0) ($35.0) -- ($30.0) ($15.0) -- ($10.0)
Incremental free cash flow ($11.0) -- ($6.0) $65.0 -- $90.0 $175.0
-- $225.0 (a) From expected closing date to year-end. (b) EBITDA is
defined as operating income before depreciation and amortization.
This presentation of EBITDA may not be comparable to similarly
titled measures used by other companies. (c) Represents the
estimated effect of accelerated depreciation and amortization. (d)
Represents the expected effect of estimated cost savings of the
combined operations and greater estimated conversion rates and
higher percentage of non-air sales in the CheapTickets business as
a result of the migration to the Orbitz platform. (e) Represents
the expected effect of integration activities, Orbitz employee
stock options and other related activities. (f) The estimated
operating income will be predominantly reflected in the Travel
Distribution Services segment's future results, but a portion will
also benefit Cendant's other travel-related segments. (g)
Incremental EPS is computed by dividing the estimated diluted
weighted average shares of common stock outstanding of 1.073
billion in 2004 and 1.088 billion in 2005 and 2006 into estimated
incremental net income resulting from the transaction. These
preliminary estimates are expected to be refined as the management
teams at Cendant and Orbitz work together to develop integration
plans over the coming months. Assuming the transaction is completed
in the fourth quarter, Cendant anticipates that it will be able to
offset the impact of transaction-related expenses and integration
charges in the fourth quarter of 2004 with the favorable settlement
of certain tax matters currently under review by the IRS. Cendant
expects to update its fourth quarter outlook for this matter and
other factors when it announces financial results for the third
quarter on October 20, 2004. Citigroup Global Markets, Inc. served
as financial advisor to Cendant and Skadden Arps Slate Meagher
& Flom LLP acted as its legal advisor. Credit Suisse First
Boston LLC served as financial advisor to Orbitz and Latham &
Watkins LLP acted as legal advisor to Orbitz. In connection with
the Orbitz board of directors' approval of the transaction, Credit
Suisse First Boston rendered an opinion as to the fairness from a
financial point of view of the transaction price. The Orbitz board
of directors also established a special committee of independent
directors to separately evaluate the transaction on behalf of
Orbitz Class A (public) shareholders. Merrill Lynch & Co.
served as financial advisor to the special committee of the Orbitz
board of directors and Winston & Strawn LLP acted as the
special committee's legal advisor. After reviewing the terms of the
proposed transaction and receiving an opinion from Merrill Lynch
that the $27.50 per share consideration to be received by the
public holders of Orbitz Class A common shares is fair from a
financial point of view, the special committee recommended that the
Orbitz board approve the Cendant transaction. The members of the
special committee are Scott D. Miller, Denise K. Fletcher and Marc
L. Andreessen. The consummation of the transaction is subject to
certain conditions, including the tender of a specified number of
the shares of Orbitz, receipt of regulatory approvals, and other
customary conditions. In addition, certain of Orbitz stockholders,
including all of its airline stockholders, who collectively own
approximately 61 percent of the fully diluted shares outstanding of
Orbitz, have agreed to tender their shares to Cendant in the
transaction. Notice To Investors This announcement is neither an
offer to purchase nor a solicitation of an offer to sell
securities. The tender offers for the outstanding shares of Orbitz
common stock described in this announcement has not commenced. At
the time the offers are commenced, a Cendant subsidiary will file a
tender offer statement with the Securities and Exchange Commission,
and Orbitz will file a solicitation and recommendation statement
with respect to the offer. The tender offer statement (including an
offer to purchase, a related letter of transmittal and other offer
documents) and the solicitation/recommendation statement will
contain important information that should be read carefully before
any decision is made with respect to the tender offer. Those
materials will be made available to Orbitz security holders at no
expense to them. In addition, all of those materials (and all other
offer documents filed with the Securities and Exchange Commission)
will be available at no charge on the Securities and Exchange
Commission's Website at http://www.sec.gov/. About Orbitz Orbitz is
a leading online travel company that enables travelers to search
for and purchase a broad array of travel products, including
airline tickets, lodging, rental cars, cruises and vacation
packages. Since launching its Web site to the general public in
June 2001, Orbitz has become the third largest online travel site
based on gross travel bookings. On http://www.orbitz.com/,
consumers can search more than 455 airlines, as well as rates at
tens of thousands of lodging properties worldwide and at 22 car
rental companies. About Cendant Travel Distribution Services
Cendant Corporation's (NYSE:CD) Travel Distribution Services
Division, is one of the world's largest and most geographically
diverse collections of travel brands and distribution businesses.
The division, employing nearly 5,000 people in more than 116
countries, includes: Galileo, a leading global distribution system
(GDS), serving more than 44,000 travel agencies and over 60,000
hotels; hotel distribution and services businesses (TRUST, THOR,
WizCom and Neat Group); leading online travel agencies
(CheapTickets.com, Lodging.com, HotelClub.com and RatesToGo.com);
Shepherd Systems, an airline market intelligence company;
Travelwire, an international travel technology and software
company; Travel 2/Travel 4, a leading international provider of
long-haul air travel and travel product consolidator; and
Travelport, a provider of online global corporate travel management
solutions. About Cendant Corporation Cendant Corporation is
primarily a provider of travel and residential real estate
services. With approximately 90,000 employees, New York City-based
Cendant provides these services to businesses and consumers in over
100 countries. More information about Cendant, its companies,
brands and current SEC filings may be obtained by visiting the
Company's Web site at http://www.cendant.com/ or by calling
877-4INFOCD (877-446-3623). Statements about the expected effects
on Cendant of the acquisition of Orbitz, statements about the
expected timing and scope of the acquisition, statements about
estimated synergies and integration costs and all other statements
in this release other than historical facts are forward-looking
statements. Forward-looking statements include information about
possible or assumed future financial results and usually contain
words such as "believes," "intends," "expects," "anticipates,"
"estimates", or similar expressions. These statements are subject
to risks and uncertainties that may change at any time, and,
therefore, actual results may differ materially from expected
results due to a variety of factors, including but not limited to,
the satisfaction of the conditions to closing of the offer, and
Cendant's ability to successfully integrate the operations and
employees of Orbitz, as well as the additional factors which are
reflected in the respective annual reports on Form 10-K of Cendant
and Orbitz for the year ended December 31, 2003, as well as in
their more recent filings with the Securities and Exchange
Commission. We caution investors not to place undue reliance on the
forward-looking statements contained in this press release. These
statements speak only as of the date of this press release, and we
undertake no obligation to update or revise the statements, risks
or reasons. All forward-looking statements are expressly qualified
in their entirety by this cautionary statement. DATASOURCE: Cendant
Corporation; Orbitz, Inc. CONTACT: Media Relations - Kate Sullivan,
Travel Distribution Services Division, +1-973-496-4540, or Elliot
Bloom, +1-212-413-1832, or Investor Relations - Sam Levenson,
+1-212-413-1832, or Henry A. Diamond, +1-212-413-1920, all of the
Cendant Corporation; Jonathan Mairs of Ogilvy Public Relations
Worldwide, +1-212-880-5353; or Media Relations - Carol Jouzaitis,
+1-312-894-4774, or Investor Relations Contact - Frank Petito,
+1-312-894-4830, both of Orbitz, Inc.; or Steve Frankel of
Abernathy McGregor, +1-212-371-5999, for Orbitz, Inc. Web site:
http://www.cendant.com/ http://www.orbitz.com/
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