NEW YORK, Sept. 29 (UPI) -- Fitch Ratings in New York Wednesday said it views the Cendant Corp.'s $1.2 billion tender offer for Orbitz Inc. as a favorable development for Cendant.
As the acquisition is currently structured, Fitch said it does not anticipate any adverse rating actions.
"Although there is some integration risk, Orbitz is currently profitable and Cendant has a successful track record achieving substantial cost savings through its restructuring of Galileo and integration of Budget post-acquisition.
"If the tender offer is successful, Orbitz will provide Cendant with a leading brand name in the online travel industry that will benefit its travel distribution segment and could provide additional bookings for Cendant's car rental and hotel businesses," the rating agency said.
Cendant's existing online travel agency, cheaptickets.com, competes with Orbitz, Travelocity and Expedia.
The true acquisition cost for Orbitz will be approximately $1 billion net of about $200 million of cash and marketable securities currently on Orbitz's balance sheet.
Orbitz's market capitalization was approximately $838 million on Tuesday.
Orbitz was originally founded by its former airline owners and launched an IPO in December 2003. During the first half of 2004, Orbitz generated about $146 million in revenue and about $12 million in operating income.
