Cendant to buy No. 1 operator of timeshares

NEW YORK — NEW YORK - Cendant Corp., which franchises everything from Ramada hotels to the Avis car rental brand, said yesterday that it agreed to buy Fairfield Communities, the nation's largest independent timeshare operator, for $728.5 million in cash, stock and assumed debt.

Cendant will pay $15 a share, or $635 million, for each of Fairfield's shares, a 14 percent premium to the company's closing share price yesterday. Cendant also will assume about $93.5 million of debt, said Robert Howeth, Fairfield's chief financial officer.


The acquisition is the third major transaction Cendant has announced in two weeks as it looks to put an accounting scandal behind it and make more acquisitions to boost its lagging stock price.

"It's a logical fit with Cendant's own timeshare business," said Michael Millman, a Salomon Smith Barney Inc. analyst. "It adds a significant amount of members and it adds a significant amount of properties."


Orlando, Fla.-based Fairfield has 33 resorts in the United States and Canada. Cendant already is in the timeshare business through its Resorts Condominiums International unit, which helps owners of timeshares swap their properties for others.

Cendant said that at least half the purchase price would be in cash, with the balance to be paid in cash or Cendant stock.

Cendant Chairman and Chief Executive Officer Henry Silverman has said this year that the company was ready to make acquisitions again to complement its main businesses.

In August, Cendant offered to buy the part of Avis Group Holdings Inc. it does not already own for $29 a share, or $750 million. Avis is the largest franchisee of Cendant's Avis car rental brand. Silverman said Cendant is likely to reach a resolution on the Avis offer by the end of the month.

Cendant also bought the AmeriHost Inn and AmeriHost Inn and Suites brand names and franchising rights.

Cendant said it might ask Fairfield to spin off its timeshare development unit to Fairfield shareholders before the purchase closes. The independent company would continue to build timeshare resorts and Cendant would be the exclusive sales agent. Cendant said it expects to complete the purchase of Fairfield early next year.

Timeshares are vacation condominiums to which customers buy rights to occupy for set periods. Silverman said they are the fastest-growing sector of the travel industry. Sales of timeshares are projected to rise to $3.9 billion in the United States this year, according to the American Resort Development Association. In 1998 they were $3.06 billion.