By: Quicken.com
(09-06-2001)

The announcement Thursday confirmed an article in The Wall Street Journal, which valued the potential cash and stock deal at about $3 billion, according to people familiar with the situation.


The companies didn't disclose specific details of the discussions in their brief statement, saying only that if the acquisition is completed, it could "materially add" to Cendant's earnings per share in 2002. They cautioned, however, that the talks could still end without a deal.

Analysts surveyed by Thomson Financial/First Call currently expect Cendant to earn $1.13 a share for 2002. In 2000, Cendant earned $576 million, or 78 cents a diluted share, on revenue of $3.93 billion.


According to people familiar with the situation, Cendant (CD, news, msgs) is negotiating a deal that would value Galileo at roughly $34 a share, more than double where the stock had been trading in October when Galileo (GLC, news, msgs) announced it was putting itself up for sale.


Galileo shares climbed $1.03 to $29.50 as of 4 p.m. in New York Stock Exchange composite trading after CNBC reported news of a potential deal. Cendant slipped 74 cents to $18.48 on the Big Board.


Cendant, based in New York, owns such hotel brands as Ramada Inn and Howard Johnson Hotels and rental-car brand Avis Group.


The company has been looking at the electronic distribution sector for a while, people familiar with the situation said. Cendant already owns WizCom, an information-technology unit that helps travel companies connect to the various electronic travel-reservation systems, which include Sabre Holdings Corp., of Fort Worth, Texas, and Worldspan LP, based in Atlanta.


The acquisition of Galileo, based in Rosemont, Ill., would be a logical extension of Cendant's WizCom business. Cendant also has been working on developing a Web-based portal for all its proprietary travel brands.