New York – Cendant Corp., which built itself into a $20 billion conglomerate to please investors, said Monday that it was disbanding into four companies. The reason for the split: its unhappy investors.
One of the four companies will take over Cendant’s hospitality businesses, including the Ramada, Howard Johnson and Days Inns hotel brands. The other three also will focus on a single area: real estate, including the Century 21 and Coldwell Banker brands; travel booking, including Orbitz, Galileo and Cheap Tickets brands; and the Avis and Budget car-rental businesses.
In Colorado, the moves will have wide – though not profound – effect, observers said.
Coldwell Banker Residential Brokerage of Colorado operates 19 offices throughout metro Denver, in mountain towns and in northern Colorado.
The company has more than 2,050 sales associates who sold homes worth more than $4.5 billion last year.
Being part of an organization focusing purely on real estate will strengthen the company’s ability to serve clients, Chris Mygatt, the division’s president, said in a statement.
“This new company at its inception begins with a financially strong balance sheet and the same leading national position that we have always enjoyed – a real estate powerhouse without a true peer in the real estate services sector,” he added.
Real estate agents at competing companies said Cendant’s forming a separate real estate company is not likely to affect their business.
“The only people it may affect are lawyers and stockholders,” said Bob Bielenberg of Bielenberg & Associates/Metro Brokers.
The move could be good for Coldwell Banker clients, said Derek Kliner, a broker with Re/Max Alliance.
“It will help the homebuyer or seller a little bit because it will be more organized and there will be fewer people to deal with,” Kliner said.
“The whole industry is trying to become more simple.”
Cendant’s Travel Distribution Services arm is also a large employer in the state, with more than 559 workers, said spokeswoman Mary Henn.
Companies under TDS with Colorado operations include Galileo International, Cendant Travel Port, a travel agency, and Thor Inc. in Louisville.
Despite Cendant’s announcement, Wall Street remained grumpy. Shares of Cendant fell $1.32, or 6.6 percent, to close at $18.77 on the New York Stock Exchange, after earlier hitting a new 52-week low of $18.36.
Cendant, whose stock price never fully recovered from a 1998 accounting scandal, is the latest conglomerate to decide its separate businesses are worth more split apart.
The moves are a coda to the aggressive corporate buying sprees of the 1990s.
The company modeled itself as a service-industry version of General Electric Co., a conglomerate that manages risk through size and diversity, company chairman and chief executive Henry R. Silverman said.
But today’s hedge-fund managers want more volatile stocks, stocks that make big moves, Silverman said.
The buy-and-hold investors of the past, who appreciated the smooth earnings a conglomerate could deliver, are gone, he said.
The Associated Press and Denver Post staff writers Margaret Jackson and Aldo Svaldi contributed to this report.
