SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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September 16, 1999 (September 14, 1999)
(Date of Report (date of earliest event reported))
Cendant Corporation
(Exact name of Registrant as specified in its charter)
Delaware 1-10308 06-0918165
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or Identification Number)
organization)
9 West 57th Street
New York, NY 10019
(Address of principal (Zip Code)
executive office)
(212) 413-1800
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if applicable)
Item 5. Other Events
Except as expressly indicated or unless the context otherwise requires,
"Cendant", "we", "our", or "us" means Cendant Corporation, a Delaware
Corporation, and its subsidiaries
Sale of Entertainment Publications Unit. On September 14, 199, we
announced the execution of an agreement to sell our Entertainment Publications,
Inc. unit, the world's largest marketer and publisher of coupon books and
discount programs to The Carlyle Group for $345 million in a leveraged
recapitalization transaction. We will retain approximately 16% of Entertainment
Publications' equity and expect to receive $325 million in cash at closing.
The sale of Entertainment Publications is expected to generate an
after-tax book gain of approximately $140 million. The transaction is subject to
customary regulatory approvals and customary conditions and is expected to close
in the fourth quarter.
Creation of Netmarket Group, Inc. On September 15, 1999, we announced the
creation of Netmarket Group, Inc. (NGI) as an independent company that will
pursue the development of interactive businesses currently within the Company's
Direct Marketing Division. NGI will own, operate, develop and expand what were
formerly Cendant's principal on-line membership businesses, including
Netmarket.com, Travelers Advantage, AutoVantage and Privacy Guard. Additionally,
NGI will own and operate Hagglezone.com, the first site of its kind where
consumers "haggle" with computer-generated on-line characters to get low prices
on name-brand products. NGI's businesses currently have 1.3 million on-line
members and are expected to produce approximately $70 million of revenue in
1999.
We will retain the opportunity to participate in NGI's value through
ownership of a convertible preferred stock, ultimately exchangeable into 78% of
NGI's fully diluted common shares. NGI's management will hold the next largest
stake through NGI stock options. We will donate NGI's outstanding common stock
to a charitable trust. In addition, NGI will issue common stock to certain of
its marketing partners. Accordingly, as a result of the change in ownership of
NGI's common stock from us to independent parties, NGI's results will no longer
be included in our financial statements.
In conjunction with the creation of NGI, we estimate that we will
record a pre-tax charge of $85 million and an after-tax charge of $48 million or
$0.06 cents per share in the third quarter of 1999.
For a more detailed description of the terms of the transactions,
reference is made to Exhibit 99.1 and 99.2, which are incorporated herein by
reference in their entirety.
Item 7. Exhibits
Exhibit
No. Description
- -------- -----------------------------------------------------------------
99.1 Press Release: Cendant Corporation Agrees to Sell Its
Entertainment Publication Unit to The Carlyle Group, dated
September 14, 1999.
99.2 Press Release: Cendant Corporation Creates Netmarket Group, Inc.,
dated September 15, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENDANT CORPORATION
By: /s/ James E. Buckman
James E. Buckman
Vice Chairman
and General Counsel
Date: September 16, 1999
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated September 16, 1999 (September 14, 1999)
EXHIBIT INDEX
Exhibit
No. Description
- -------- -----------------------------------------------------------------
99.1 Press Release: Cendant Corporation Agrees to Sell Its
Entertainment Publication Unit to The Carlyle Group, dated
September 14, 1999.
99.2 Press Release: Cendant Corporation Creates Netmarket Group, Inc.,
dated September 15, 1999.
EXHIBIT 99.1
Cendant Agrees to Sell its Entertainment Publications Unit
to The Carlyle Group for $345 Million
New York, NY, September 14, 1999CCendant Corporation (NYSE:CD) today
announced that it has agreed to sell its Entertainment Publications, Inc. unit,
the world's largest marketer and publisher of coupon books and discount
programs, to The Carlyle Group for $345 million in a leveraged recapitalization
transaction. Cendant will retain approximately 16% of Entertainment
Publications' equity and will receive $325 million in cash at closing.
The sale of Entertainment Publications is expected to generate an after-tax
book gain of approximately $140 million. The transaction is subject to customary
regulatory approvals and customary conditions and is expected to close in the
fourth quarter.
Michael H. Wargotz, Cendant Executive Vice President and CEO of Cendant's
Lifestyle Division which includes Entertainment Publications, stated, "This is
another milestone in our plan to divest certain non-core businesses. Also
exciting, however, is the opportunity to retain an equity position in
Entertainment Publications as it continues its history of profitability and
growth."
The Carlyle Group is a global investment firm that leads management
buyouts, growth capital financings, strategic minority equity investments and
venture capital financings. Founded in 1987, Carlyle has invested in 117
corporate and real estate transactions and currently has approximately $5
billion of capital under management.
Frank Yeary, Partner of The Carlyle Group and head of its Communications
Group, said, "We are pleased to partner with the strong management team at
Entertainment Publications in order to support and enhance its position as the
nation's leading coupon and fundraising products company." Francis Barker,
Principal in the Communications Group, commented, "Carlyle is eager to help
pursue Entertainment Publications' ambitious growth plan, which will take the
company into new markets, products and distribution channels."
Entertainment Publications, based in Troy, Michigan, generates high value
coupons and offers from 73,000 merchants representing 275,000 locations,
including popular restaurants, hotels, movie theaters, travel services, theme
parks, sports events, video rental, retailers and service companies. The coupon
books created from this database include The Entertainment Book(R),
Entertainment(R) Values, and Gold C(R). The company produces customized discount
programs for Fortune 1000 companies. Entertainment Publications owns the product
lines Sally Foster Gift Wrap(R), Summer Vacation7 and Restaurant Secrets7. In
1998, the company's products, including the sale of seven million coupon books,
enabled over 67,000 North American charitable and school organizations to raise
nearly $80 million in funds for their community and school activities. The
company's products are distributed in over 140 markets in the U.S., Canada and
Puerto Rico and in seven markets in Australia and New Zealand.
Veronis, Suhler & Associates acted as financial advisor to Cendant
Corporation and Merrill Lynch & Co. acted as financial advisor to The Carlyle
Group in connection with the transaction. CIBC World Markets Corp. and Merrill
Lynch Capital Corporation have underwritten $240 million of credit facilities to
effect the recapitalization.
Cendant Corporation is a global provider of consumer and business services.
The Company's core competencies include building franchise systems, providing
outsourcing solutions and direct marketing. As a franchisor, Cendant is among
the world's leading franchisors of hotels, rental car agencies, tax preparation
services and real estate brokerage offices. The real estate division also
includes Welcome Wagon/GETKO and the Company's residential real estate services
Internet portal which is currently under development. As a provider of
outsourcing solutions, Cendant is the world's largest vacation exchange service,
a major provider of mortgage services to consumers and the global leader in
employee relocation. In direct marketing, Cendant provides access to insurance,
travel, shopping, auto, and other services primarily to customers of its
affinity partners. Other business units include NCP, the UK's largest private
car park operator, and Wizcom, an information technology services provider.
Headquartered in New York, NY, the Company has more than 30,000 employees and
operates 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 www.Cendant.com or
by calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen
212-413-1832 212-413-1833
Sam Levenson
212-413-1834
EXHIBIT 99.2
Cendant Corporation Creates Netmarket Group, Inc. as Independent Company
Netmarket to Pursue Rapid Growth of Interactive Membership Businesses
Cendant Will Fund Netmarket with $77 Million Development Advance
Cendant to Record $0.06 Third Quarter Charge
New York, NY, September 15, 1999 -- Cendant Corporation (NYSE: CD) today
announced it has created Netmarket Group, Inc. (NGI) as an independent company
that will pursue the development of interactive businesses currently within the
Company's Direct Marketing Division. NGI will own, operate, develop and expand
what were formerly Cendant's principal on-line membership businesses, including
Netmarket.com, Travelers Advantage, AutoVantage and Privacy Guard. Additionally,
NGI will own and operate Hagglezone.com, the first site of its kind where
consumers "haggle" with computer-generated on-line characters to get low prices
on name-brand products. NGI's businesses currently have 1.3 million online
members and are expected to produce approximately $70 million in revenue in
1999.
Cendant's Chairman, President and CEO, Henry R. Silverman, said: "The
creation of Netmarket Group as an independent company will allow NGI to
aggressively create value as an Internet company, unimpeded by having to
consider the financial impact of its tactical and strategic decisions on
Cendant. Netmarket will also now have its own equity to incent its managers and
to pursue strategic opportunities.
"These are essential elements to creating value on-line," Silverman
continued. "We expect NGI's management to accelerate growth and create real
value which can be recognized through an IPO or other mechanism as the business
develops."
Cendant will retain the opportunity to participate in NGI's value through
ownership of a convertible preferred stock, ultimately exchangeable into 78% of
NGI's fully diluted common shares. NGI's management will hold the next largest
stake through NGI stock options. Cendant will donate NGI's outstanding common
stock to a charitable trust. In addition, NGI will issue common stock to certain
of its marketing partners. Accordingly, as a result of the change of ownership
of NGI's common stock from Cendant to independent parties, NGI's results will no
longer be included in Cendant=s financial statements.
"Netmarket Group will operate as a vital resource to Cendant's classic
off-line membership business," said Michael P. Monaco, vice chairman of Cendant
and CEO, Direct Marketing Division. "NGI will pursue a variety of strategic
opportunities, some independently, some together with Cendant's Individual
Membership Division. The Internet is a critical area of future growth for the
membership division. With NGI as a strategic partner, our opportunities to
better serve customers are dramatically expanded, to the mutual benefit of both
businesses."
In conjunction with the creation of NGI, Cendant estimates it will record a
pre-tax charge of $85 million and an after-tax charge of $48 million or $0.06
cents per-share in the third quarter of 1999.
Visit Netmarket Group=s businesses on the Web and America Online:
http://www.netmarket.com, AOL Keyword: netmarket
http://www.travelersadvantage.com, AOL Keyword: travelersadvantage
http://www.autovantage.com, AOL Keyword: autovantage
http://www.privacyguard.com, AOL Keyword: creditalert
http://www.hagglezone.com, AOL Keyword: hagglezone
http://www.fareagent.com
Statements about future results made in this release may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on current
expectations and the current economic environment. The Company cautions that
these statements are not guarantees of future performance. They involve a number
of risks and uncertainties that are difficult to predict. Actual results could
differ materially from those expressed or implied in the forward-looking
statements. Important assumptions and other important factors that could cause
actual results to differ materially from those in the forward-looking statements
are specified in the Company=s Form 10-K/A for the year ended December 31, 1998,
including the resolution of the pending class action litigation and the
Company's ability to implement its plan to divest non-strategic assets.
Cendant Corporation is a global provider of consumer and business services.
The Company=s core competencies include building franchise systems, providing
outsourcing solutions and direct marketing. As a franchisor, Cendant is among
the world=s leading franchisors of hotels, rental car agencies, tax preparation
services and real estate brokerage offices. The real estate division also
includes Welcome Wagon/GETKO and the Company's residential real estate services
Internet portal which is currently under development. As a provider of
outsourcing solutions, Cendant is the world's largest vacation exchange service,
a major provider of mortgage services to consumers and the global leader in
employee relocation. In direct marketing, Cendant provides access to insurance,
travel, shopping, auto, and other services primarily to customers of its
affinity partners. Other business units include NCP, the UK's largest private
car park operator, and Wizcom, an information technology services provider.
Headquartered in New York, NY, the Company has more than 30,000 employees and
operates 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 www.Cendant.com or
by calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen
212-413-1832 212-413-1833
Sam Levenson
212-413-1834