Cendant sells software unit to Havas
Cendant says it will sell its consumer software division, Cendant Software and its subsidiaries, to Paris-based Havas for approximately $1 billion.
Cendant is primarily a travel and real estate services firm and marketing company.
The deal calls for Havas to pay $800 million in cash plus future cash contingent payments of up to approximately $200 million through 1999. The transaction is subject to customary regulatory approvals and is expected to be completed in the first quarter of 1999.
Cendant had previously announced its intent to sell its consumer software divisions which include educational and entertainment software makers Davidson & Associates, Knowledge Adventure, and Blizzard Entertainment, and computer game maker Sierra On-Line.
Established last December through the $11 billion merger of HFS and CUC International, Cendant shocked the Street in April when it alleged "widespread and systemic" fraud at CUC.
Cendant has been wracked by shareholder suits and allegations of irregular accounting this year.
"We will continue to execute our program of selling noncore businesses while maximizing the growth of Cendant's core business units," Cendant chairman, president and CEO Henry Silverman said in a statement.
He added that the company is no longer a buyer of companies financed through the issuance of debt and stock, but rather a seller of companies, utilizing the proceeds of those sales to retire debt and equity.
"The sale of our software business will be accretive to 1999 earnings per share and will result in an after-tax gain of approximately $450 million," Silverman added.
Shares of Cendant surged in early trading today, rising 9.09 percent to 15.75. The stock yesterday closed 7.94 percent higher yesterday at 14.44 and has traded as high as 41.69 and as low as 6.5 during the past 52 weeks.