BDGPA the gapper tomorrow:
Cendant Agrees to Acquire Budget Group
Cendant Agrees to Acquire Budget Group
Strategic Investment by Parent Company of Avis Rent A Car
Budget to Remain an Independent Brand
Regulatory Clearance Obtained from FTC
Official Creditors Committee Agrees to Support Acquisition
NEW YORK and LISLE, Ill., Aug. 22 /PRNewswire-FirstCall/ --
Cendant Corporation (NYSE: CD) today announced that it has entered into a
definitive agreement to acquire substantially all of the assets of Budget
Group, Inc. (OTC Bulletin Board: BDGPA) for $107.5 million in cash plus the
payment of certain transaction related expenses and assumption of certain
contracts and trade payables. In addition, a subsidiary of Cendant will
assume approximately $2.7 billion in non-recourse asset-backed vehicle-related
debt. Budget Group is the third-largest general use car and truck rental
company in the United States.
Pursuant to the definitive agreement, Cendant will acquire Budget's
operations in the United States, Canada, Australia, New Zealand and Latin
America. Budget is seeking a buyer for its operations in Europe, the Middle
East and Africa and anticipates that these operations will continue to operate
as usual under the Budget brand name. The companies expect to complete the
transaction during the fourth quarter of 2002.
Following the acquisition, Budget will continue to operate as a separate
and independent brand. Budget will complement the travel services currently
offered by Cendant, including Avis car rental, Galileo travel distribution
services, Trendwest and Fairfield Resorts timeshare development, RCI timeshare
exchange, Cendant Travel Services, Cendant's nine lodging brands, Lodging.com
and CheapTickets and Trip.com through Cendant's affiliation with Trip Network,
Inc.
"We believe that bringing Budget into our family of companies provides
numerous synergies with Cendant's existing lines of business. Beyond the
clear cost efficiencies of combining overhead and administrative functions of
Avis and Budget, adding the Budget brand to our travel mix will allow us to
reach value-conscious travelers more effectively through our timeshare, travel
services and online booking channels," said Henry R. Silverman, chairman,
president and Chief Executive Officer of Cendant.
"This transaction is also consistent with our articulated strategy of
making add on acquisitions in our core travel and residential real estate
segments. We remain committed to our plan to use our free cash flow primarily
to reduce indebtedness," Mr. Silverman concluded.
Sandy Miller, Chairman and Chief Executive Officer of Budget Group, Inc.,
said, "As a strategic buyer, Cendant will provide numerous resources to
strengthen and grow Budget's rental operations. In addition, joining forces
with Cendant will allow Budget to operate as an independent brand, enjoy many
synergies created by this transaction and continue serving its customers in
the same quality manner."
Cendant and Budget have agreed to assemble a transition team comprised of
senior managers to ensure a seamless integration of the companies. Cendant
does not anticipate changes in Budget's operational management or workforce
that would impact service to customers or suppliers.
Cendant will not assume roughly $750 million of Budget's non-vehicle-
related debt and preferred securities. Budget believes it is unlikely that
holders of its Convertible Subordinated Notes, Trust Preferred Securities, and
Common Stock will receive any distribution or recovery. It is expected that
the holders of Budget Senior Notes will receive a distribution at the
conclusion of the bankruptcy process.
The official committee of unsecured creditors of Budget Group, Inc. stated
that it supports the sale of substantially all of the assets of Budget's U.S.,
Canadian, Latin American and Asian-Pacific operations to Cendant Corporation
pursuant to a definitive purchase agreement entered into today by Budget and
Cendant. The committee has taken the position that the prompt sale of
Budget's business is important and likely to maximize the potential recovery
to unsecured creditors. Subject to a bankruptcy court auction for higher and
better offers to acquire the business for cash, the committee supports the
transaction including the proposed bidding procedures and the timetable to
close the transaction.
Consummation of the transaction remains subject to certain conditions,
including bankruptcy court and regulatory approval outside the United States.
The transaction has received clearance under U.S antitrust regulations.
Lazard Freres & Co. is acting as Budget's exclusive advisor with respect to
the sale process; Salomon Smith Barney is acting as Cendant's financial
advisor.
Based on the terms of the transaction, the acquisition is expected to be
accretive to Cendant's earnings per share in 2003. However, Cendant has not
yet provided earnings guidance for 2003.
Statements made in this press release that are not historical in nature
may constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Those statements include statements
regarding the intent, belief or current expectations of Budget, Cendant and
their respective management teams, as well as the assumptions on which such
statements are based. Forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and actual results may differ
materially from those contemplated by such forward-looking statements. These
risks and uncertainties include factors relating to Budget's restructuring
process (such as the availability of financing over time, the results of the
bankruptcy court consideration of the Cendant transaction and other factors
relating to the ability to complete the sale to Cendant, and the outcome of
the Budget's efforts to sell its operations in Europe, the Middle East and
Africa) as well as matters contained in the Budget's Annual Report on Form
10-K for the year ended December 31, 2001 and in other documents subsequently
filed by Budget with the SEC, all of which are available from the SEC. The
risks and uncertainty related to Cendant include factors specified in
Cendant's Form 10-K/A for the year ended December 31, 2001.
About Budget Group, Inc.
Budget Group, Inc. owns Budget Rent a Car Corporation Budget is the
world's third largest car and truck rental. For more information, visit the
Company's Web site at budget.com.
About Cendant Corporation
Cendant Corporation is primarily a provider of travel and residential real
estate services. With approximately 70,000 employees, New York City-based
Cendant provides these services to business 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
cendant.com or by calling 877-4-INFOCD (877-446-3623).
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SOURCE Cendant Corporation
-0- 08/22/2002
/CONTACT: Cendant Media - Elliot Bloom, +1-212-413-1832, or Ted Deutsch,
+1-973-496-7865, or Cendant Investor - Sam Levenson, +1-212-413-1834, or Henry
A. Diamond, +1-212-413-1920; Budget Group Media - Kimberly Mulcahy,
+1-630-955-7672, or Budget Group Investor - Sarah Lewensohn, +1-630-955-7602/
/Web site: cendant.com /
(CD BDGPA) |
