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November 22, 1998

CENDANT SELLS SOFTWARE BUSINESS FOR UP TO $1BN

By CBR Staff Writer

As it announced it would in August, marketing giant Cendant Corp has sold its sizable software business for up to $1bn. The buyer is French media and advertising company Havas SA, a subsidiary of Vivendi SA, which will fork over $800m in cash and as much as $200m in performance-based contingent payments. The Cendant Software business includes games developers Sierra On-Line and Blizzard Entertainment, multimedia educational and entertainment outfit Davidson & Associates and Knowledge Adventure, which specializes in educational software. Revenues for the software business have been growing rapidly and are on pace to hit $500m this year, although profitability remains elusive. Its sale comes as part of Cendant’s ongoing program of divesting non-core businesses while growing its core business units – travel services, real estate services and alliance marketing – in the name of shareholder value. It recently sold the Hebdo Mag International classified advertising business and has embarked on a $1bn share repurchase program. Cendant said it has undergone a fundamental change in that it is no longer a buyer of companies financed through debt and stock, but is now a seller of companies, utilizing the proceeds to retire debt and equity. The sale of the software business is expected to be accretive to 1999 earnings and will result in an after-tax gain of roughly $450m. á

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