Cendant Corp. will sell its software businesses to Havas, a French media and advertising subsidiary of Vivendi SA, for about $1 billion in cash, the company confirmed Friday.
Shares of Cendant (CD) were up 8 percent to 14 7/16 at Thursday on speculation about the sale.
Havas will pay $800 million in cash immediately and about $200 million in contingent cash payments through 1999.Cendant's software businesses include popular education programs and games sold under the Sierra On-Line, Davidson, Knowledge Adventure and Blizzard Entertainment brands.
"We are no longer a buyer of companies financed through the issuance of debt and stock, but rather a seller of companies, utilizing the proceeds of those sales to retire debt and equity," said Cendant Chairman and CEO Henry Silverman in a statement. He said the sale would result in an after-tax gain of about $450 million in 1999.
Cendant, whose shares traded in the high 20s this summer before the company was beset by an accounting scandal, is taking steps to right its business and burnish its image. The company has restated earnings from 2995 through 1997 to reflect accounting irregularities at its CUC International unit.
Earlier this month, Cendant posted third-quarter earnings that fell from a year ago, brought down by charges associated with its accounting investigation. Earlier this year, Cendant disclosed that CUC executives had inflated revenue figures by as much as $500 million.
In October, the company, which owns such franchises as Avis rental cars, Ramada hotels and the Coldwell Banker real estate agency, said it planned to buy back $1 billion in common stock.
On the day the company announced its buyback plan, it also said its planned purchase of American Bankers Insurance Group had fallen through. At the time, Cendant said its principal financial goals were to retire $3.25 billion in debt and repurchase stock.
Cendant said at the time that its only material uncompleted acquisition is a planned $750 million purchase of RAC Motor Services of the United Kingdom. At the time, Cendant sid it expected to complete the purchase in 1999.
Written By Stephanie O'Brien