Saturday, July 01, 2006

Selling Cendant Travelport - Turning 7 into 4.3

Congrats to Cendant on selling TDS/Travelport to the renowned private equity firm Blackstone. Forbes called the price/deal "adequate". FT says the the price is "no knock out". Considering the state of the assets, the price on the deal is well described as adequate/OK as the earnings multiple is better than Sabre's, hence the congratulations. However, I would use harsher terms to describe the state of affairs that led to this being the best price of the assets. It is publicly known that the Travelport business was built over the course of 5 years and more than a dozen acquisitions costing $7bil. Simple maths shows $2.7bil is lost value. Should provide the remaining Cendant entities with tax credits as well as cash to help with debt. Blackstone are the masters and finding that lost value. Two possibilities from them, a turn around and flip within 3 years or a break-up and separate sale. I'm betting on a break-up.

UPDATE 1 - Travelmole comment
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UPDATE 2 - Redherring
UPDATE 3 - e-tid with a collection of comments from newsites and papers (registration required but free)

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