Cendant Said To Be Near Deal To Sell Software Business To Vivendi
NEW YORK -(Dow Jones)- Cendant Corp., the marketing and franchising company marred by accounting problems, reportedly is set to announce the sale of its sprawling consumer-software business to Vivendi SA, a French conglomerate with interests ranging from utilities to media.
The London-based Financial Times Friday reported that the deal is valued at between $800 million and $1 billion and that Vivendi is expected to pay cash. But the report cautions that the deal has yet to be signed.
Cendant, which has taken big charges this year to reflect massive fraud at its former CUC International Inc. operations, has been able to show that its core business is solid, including its Century 21 and Coldwell Banker real-estate units.
Cendant, which recently announced a deal to sell its magazine unit, charted plans to shed its software business back in August Cendant was looking at various options for the software business, including an initial public offering or sale. The operations, which together are one of the biggest makers of entertainment and educational software titles, includes well-known brands such as Knowledge Adventure, Blizzard Entertainment, Davidson & Associates and Sierra On-Line Inc. They have about $650 million in annual revenue.
The sale is part of Cendant Chairman and Chief Executive Officer Henry Silverman's plan to rebuild the company after it disclosed years of accounting irregularities at CUC International, which merged with HFS Inc. in a $14 billion deal last year to form Cendant.
CUC had been primarlily a membership-based, discount-shopping service but also had big plans in the software business. In 1996, it bought Davidson & Associates, one of the largest makers of educational software, for $1.14 billion. It also bought Sierra On-Line Inc., one of the biggest makers of personal-computer games, for $1.06 billion. Knowledge Adventure produces the JumpStart learning series. CUC, which was best known for its restaurant-coupon books, saw the software pickups as a way to move its core services into the on-line marketplace.
The sale comes at a key time in the rapidly consolidating market for educational and entertainment software. Cendant and Learning Co. had been competing for leadership of the market, with Learning making several acquisitions. Size will be key to survival in the entertainment software market, where many analysts predict only a few major players will exist at the turn of the century. Analysts say the firms need strong, diversified product lines.
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