Cendant Corporation
and Orbitz, Inc.
have announced 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. 
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