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Cendant Expanding in California With Purchase

Deals: Hotel franchiser agrees to acquire Trendwest Resorts for $927 million in stock to boost its time-share business in the West.


Cendant Corp., the world's largest hotel franchiser, said Monday that it has agreed to buy Trendwest Resorts Inc. for about $927million in stock, bolstering its time-share resort business with properties in California and elsewhere on the West Coast.

New York-based Cendant has said it wants to expand its time-share business to benefit from an aging U.S. population, which is expected to have more money for travel. Cendant's existing time-share operations, which it acquired in the last year, are mainly in the eastern United States.

Trendwest operates resorts in California and other Western states, British Columbia, Mexico, Hawaii and the South Pacific. Its 48 properties have about 150,000 time-share owners, who buy ownership rights to a property for a specified period each year.

Cendant will exchange 1.297 to 1.486 of its shares, or an average of $26.72, for each share of Redmond, Wash.-based Trendwest, and will assume about $74million in debt in the deal.

Shares of Trendwest rose 97 cents to $24.99 on Nasdaq, and are up 57% over the last 12 months. Cendant fell 18 cents to $19.02 on the Big Board.

Trendwest is 80% owned by Jeld-Wen Inc., a Klamath Falls, Ore.-based manufacturer of windows and doors, which has been seeking to sell its stake since 1999.

The company had revenue of $469.2 million in 2001, compared with $8.95 billion for Cendant.

The deal will generate about $15million annually through cost savings and other synergies, and would add 1 cent per share to earnings in 2002 and 2 cents next year, Cendant said. The company was expected to earn $1.32 a share, according to IBES International Inc.

Cendant owns such hotel chains as Days Inn, Ramada, Howard Johnson, as well as the Avis rental car and Century 21 real estate businesses.

Its has made more than $6 billion of acquisitions in the travel business since the beginning of 2000, including travel reservation company Galileo International Inc. and Cheap Tickets.

The time-share business provided 6% of Cendant's revenue last year, collecting $390 million in exchange fees. The business is expected to be one of Cendant's fastest growing in 2002, with revenue rising 15%, according to Fulcrum Global Partners.

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