Cendant Reorg Creates Four Companies

Cendant’s stock can’t get any respect.

The holding company, based in New York City with 85,000 employees worldwide, thinks its stock is significantly undervalued, so it will separate the business into four independent public companies in an effort to unstick the stock price.

According to Monday’s announcement, the massive company will be organized into four verticals, reflecting Cendant’s current lines of business: real estate, travel distribution, hospitality and the Avis and Budget vehicle rental operations.

While most of the new verticals are primarily traditional businesses, the Travel Network will be stuffed with e-commerce offerings, including CheapTickets.com and Orbitz focused on the U.S. markets, and ebookers.com, HotelClub.com, RatesToGo.com, Travel 2 and Travel 4 playing similar roles in international markets.

Cendant bought Orbitz in September 2004 for $1.25 billion. It snagged the assets that became CheapTickets.com in April 2003 for an undisclosed sum.

“This structure removes another layer of complexity, enables the companies to have readily identifiable market comparables and preserves most of the revenue synergies among our business units,” Cendant Chairman and CEO Henry Silverman said in a statement. Silverman will serve as CEO of the Travel Network.

It turned out well when Cendant made a similar move in 2004, creating three new companies through two initial public offerings and one spin-off. The share price appreciation of Jackson Hewitt, PHH Corporation and Wright Express has significantly outperformed their respective industry groupings — and Cendant, the company said.

The reorganization will ditch the Cendant name, which lost its luster — as did the stock — in 1998, when the company admitted accounting irregularities.