Posted on: Wednesday, September 19, 2001

Cendant holds to plan to buy Cheap Tickets

Advertiser Staff and News Services

Honolulu ticket wholesaler Cheap Tickets Inc. said yesterday its acquisition by Cendant Corp. is proceeding, despite Wall Street speculation the merger could be delayed or called off because of weakness in the travel industry after last week's terrorist attacks.

Cendant on Aug. 13 announced plans to buy Cheap Tickets for $16.50 per share, a net price of $280 million. The proposal has cleared regulatory hurdles and awaits finalization. A Cendant tender offer for Cheap Tickets shares expires midnight Friday.

But since last week, some investors fear that Cendant may rethink its strategy and try to pull out of, or rejigger, the deal.

Similarly, investors fear that Cendant may end a planned purchase of Galileo International Inc., and that USA Networks Inc. may renege on its plan to buy a controlling stake in online travel concern Expedia Inc. from Microsoft Corp. Stock in all of those acquisition targets plummeted Monday.

A Cheap Tickets spokeswoman said yesterday that the company is in "constant communication" with Cendant about the deal, but would not divulge details.

"As it stands now, all previous public statements about the deal remain in effect and are accurate," said Dawn Soper Lyon, Cheap Tickets spokeswoman.

A spokeswoman for Cendant, which owns and franchises a global network of travel service brands such as Avis, yesterday reiterated comments from the company on Monday that "the status (of the deals) has not changed. If there is a material change, we will issue a statement publicly."

Stock in Cheap Tickets plunged 24 percent to $12.55 on Monday, the first day of trading after the destruction of the World Trade Center and damage to the Pentagon Sept. 11.

As expected, travel industry stocks were pummeled as airlines and hotels predicted billions of dollars in losses due to the attacks. Cheap Tickets shares gained 45 cents, or 3.6 percent, yesterday, trading in the afternoon at $13.

For the deal to proceed quickly, Cendant must buy 90 percent of the Cheap Tickets shares sought through the tender offer. If Cendant doesn't buy enough shares by midnight Friday, it would have to extend the tender offer, or convince remaining Cheap Tickets shareholders at a proxy meeting to approve a final deal.

Cheap Tickets sells discounted travel tickets through its Web site, at kiosks and over the phone.