Cendant, Royal Auto Deal Collapses
Feb. 04, 1999
NEW YORK (AP) _ Cendant Corp. is dropping plans to acquire part of Royal Auto Club Ltd. after British antitrust regulators demanded that Cendant divest from its Green Flag breakdown assistance business.
The $758.8 million deal had been announced in May. It was driven by expected cost savings and synergies between Royal Auto Club and Green Flag, said Cendant vice chairman Stephen P. Holmes.
Now, Cendant intends for Green Flag to compete with RAC and others in Britain's auto breakdown services market, Holmes said Thursday.
Cendant's shares fell 56 1/4 cents, or 2.5 percent, to $21.87 1/2 on the New York Stock Exchange.
Cendant, which owns brand names such as Ramada, Avis and Century 21 real estate, has been shedding businesses since an accounting scandal surfaced in April from the operations of CUC International Inc., one of the companies that merged in December 1997 to create Cendant.
Cendant has lost $20 billion of its market value since revealing accounting irregularities in April. Ten directors associated with CUC have resigned, and investors filed one of the largest class-action lawsuits in history in federal court.
Money set aside for the Royal Auto Club purchase will instead be used to reduce debt and repurchase Cendant shares, Holmes said. Cendant recently announced it was boosting its stock buybacks by $200 million, to $1.2 billion.
Cendant, which moved its headquarters to New York from Parsippany, N.J., last month, has more than 35,000 employees and operates in more than 100 countries.