Cendant To Buy Cheap Tickets For $425 Million

Cendant Corp., owner of Avis Rent-A-Car, Howard Johnson hotels, and a host of other real-estate franchises, is buying online travel site Cheap Tickets Inc. in a deal worth $425 million. Cendant plans to purchase all of Cheap Tickets' outstanding stock at $16.50 per share. The deal is subject to regulatory approval and is expected to close this fall.

Cheap Tickets, which sells non-published and published airline tickets at discount prices, would enhance Cendant's as yet unlaunched affiliate Travel Portal Inc., by combining low-cost airfare with hotel, rental car, or time-share inventory. Cheap Tickets would also compliment Trip.com, the online business travel service that Cendant's acquiring from online travel-distribution company Galileo International Inc.

Cendant is still awaiting regulatory clearance to complete the Galileo acquisition. The European Union Commission restarted its antitrust investigation of the $3 billion deal last week. Cendant's competitors in the United States are also concerned that their properties will not receive equal placement or promotion on Galileo travel systems, compared to Cendant's properties, should the acquisition be approved.

Conversely, Cendant's properties can't afford not to distribute their travel services through a variety of channels, says Forrester analyst Henry Harteveldt. "Right now, Cendant hotels are free to do business with Expedia and others, in terms of selling excess inventory," says Harteveldt. "But will Cendant restrict them once Cheap Tickets is integrated into the Galileo system?" To nix anti-competitive practices, he says, "regulation is required to ensure that travel agencies operate in a fair, unbiased, arms-length manner."