Cendant is gobbling Orbitz for $1.2 billion.
Cendant is a stock that I have owned for some time. They are a heavyweight in the travel and real estate business (Avis, Budget Rent a car, Days Inn, Ramada, etc.). They also happen to be perceived as one of the WORST managed companies. I personally think that the management is average (albeit hugely overpaid) rather than bad, but it has been my contention that they have been underleveraged for some time. However, they are paying a huge premium- 37%- for Orbitz, which I am convinced is too much. If you believe in the efficient market theory, $400 million+ too much. I don't necessarily believe in that theory (esp. for small caps like Orbitz), but I do believe that whatever synergies they get might be insufficient. It's going to be a hard slog to get a reasonable return, although one could make the case that Orbitz would be a great storefront for the hotel and rent a car business... although, if they are perceived as being too biased, there is the potential that competitors could fail to list- they need Hertz and Enterprise and Alamo, otherwise people will go to other sites to book travel and they will have to take a writedown on their investment. Silverman may retire next year but his stock options remain an incentive to do what is in the long term health of the company.