Cendant Completes Acquisition of Galileo International For Approximately 1.8 Billion USD in Stock and Cash
NEW YORK, Oct. 1 / Cendant Corporation CD today announced that it has completed its previously announced acquisition of Galileo International, Inc. GLC for approximately $1.8 billion in common stock and cash. Cendant also assumed approximately $540 million of Galileo net debt, which it will retire. When the Company announced its intention to acquire Galileo in June 2001, the transaction value was estimated to be approximately $2.
Galileo shareholders will receive 1.328 shares of Cendant common stock and approximately $4.08 in cash for each share of Galileo. The stock portion of the consideration is expected to be tax-free to Galileo shareholders.
Additionally, Mark E. Miller, formerly president and COO of Cendant's Travel Division, has been appointed president & CEO of Galileo, and Samuel L. Katz, chairman and CEO of Cendant's Travel Distribution Division, has taken on the additional role of chairman of Galileo.
The Company expects the transaction to be accretive to its earnings per share beginning in the fourth quarter of 2001, and significantly more accretive as air travel approaches levels experienced prior to the events of September 11, 2001.
As previously announced, the Galileo and Cheap Tickets transactions will be less accretive than originally expected, however, the Company will take management action which will enable its newly formed Travel Distribution Division to make a positive contribution on both a cash and earnings per share basis, immediately. Latest estimates by the airline industry indicate an expected reduction in air travel of approximately 20 percent in 2002. Assuming Galileo experiences a similar reduction in air travel bookings, the Travel Distribution Division will add $0.07 to $0.09 per share to Cendant's 2002 earnings compared with earlier projections of $0.11 to $0.16.
Cendant's Travel Distribution Division has three principal components: reservations transactions systems provider WizCom, which handles reservations for more than 115 hotel and car rental chains in over 40 countries; Cendant's travel agency business; and now Galileo. It is also anticipated that the off-line operations of Cheap Tickets, Inc. will be added to Cendant's Travel Distribution Division when that acquisition closes, which is expected to be on October 5, 2001.
Quantitude, Galileo's telecommunications network services provider, has been combined with Cendant's telecommunications group, and THOR, also a Galileo subsidiary, offering discounted hotel rate programs to more than 15,000 travel agencies, is being integrated with Cendant's travel agency business. The Company also announced that Travel Portal, Inc. (TPI), an affiliate of Cendant is acquiring the licensing rights to Galileo's
Cendant's Chief Strategic Officer and Chairman & CEO of the Travel Distribution Division, Samuel L. Katz stated: "The near term impact of the events of September 11 on Galileo's earnings does not make its acquisition any less strategic, and we remain excited by the prospects that the addition of Galileo creates for Cendant. Our underlying objective is to provide value-added services to businesses and consumers around the world, primarily within the travel and residential real estate sectors. Clearly, Galileo's business will make a great contribution to this objective, enabling us to provide large corporations, small businesses, travel agencies and individual consumers with the broadest possible range of travel services.
"The anticipated combination of Galileo, Cheap Tickets, Cendant's travel agencies and our inventory of hotel rooms, timeshare intervals and rental cars as well as that of third parties will drive consumption of business and leisure travel, bringing added value to all travel industry participants. Galileo's fee-for-services business model, customer relationships and consumer base are highly complementary to Cendant's, and its major presence in air travel bookings, substantial international reach and significant online resources will facilitate our ability to capitalize on future growth opportunities within the travel industry."
Mark E. Miller, president & CEO of Galileo, said, "Galileo's great team of professionals is a powerful new addition to Cendant. We are excited to work with them to offer an even more comprehensive and cost-effective suite of travel services. I am excited about the opportunities that the combination of these two companies provides for distribution customers, supplier partners and travelers worldwide. Given the extensive planning by Cendant and Galileo to date, we expect a seamless integration of operations."
Effective immediately, Cendant will begin to transition Galileo's corporate functions to Cendant's facilities in Parsippany, NJ. About 200 positions will be eliminated over the next 18 months as merger synergies are realized primarily from combining corporate functions. Galileo's Rosemont, IL, Denver, CO, and internationally based facilities, however, will remain key operating centers of Cendant's Travel Distribution Division.
About Cendant
Cendant Corporation is primarily a provider of travel and residential real estate services. With approximately 60,000 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
About Galileo International
Galileo International is a diversified, global technology leader. Its core business is providing electronic global distribution services for the travel industry through its computerized reservation systems, leading-edge products and innovative Internet-based solutions. Galileo is a value-added distributor of travel inventory dedicated to supporting its travel agency and corporate customers and, through them, expanding traveler choice. Headquartered in Parsippany, New Jersey, USA, Galileo International has offices worldwide. Visit
Statements about future results made in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment. The Company cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Cendant's Form 10-K/A and Galileo International, Inc.'s Form 10-K for the year ended December 31, 2000. Moreover, events and responses relating to national security could also negatively impact actual results.
Such forward-looking statements include projections. Such projections were not prepared in accordance with published guidelines of the American Institute of Certified Public Accountants or the SEC regarding projections and forecasts, nor have such projections been audited, examined or otherwise reviewed by independent auditors of Cendant or its affiliates. In addition, such projections are based upon many estimates and are inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of management of Cendant and its affiliates. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by Cendant or its affiliates that the projections will prove to be correct.