The take-over forms part of a major re-organisation of American-owned Cendant Corporation which also involves the sale of roadside assistance and recovery organisation Green Flag International car rental giant Avis outbid several companies in the auction for PHH, and expects to conclude the deal by June 30.
The deal will link its 205,000-strong worldwide fleet to PHH's 700,000-vehicle global fleet, establishing a rival to GE Capital Fleet Service's one million vehicles - the world's largest corporately-owned fleet. Financially troubled Cendant Corporation will use the $1.44billion cash generated through the disposal of its fleet businesses to reduce its outstanding debt and improve its debt-to-equity ratio.
Cendant will also receive $360million in Avis stock, increasing its shareholding in Avis from 19% to 34%. Cendant originally owned Avis Rent A Car before floating the company on the US stock exchange in 1997 and it continues to own the master franchise rights to the Avis brand name.
Cendant bought PHH Corporation for $1.7billion in 1996 and will retain PHH's mortgage and relocation businesses. It claims it will make an after-tax gain of $750million by selling PHH's fleet business, which in Europe falls under the umbrella of Cendant Business Answers.
This covers PHH's contract hire, fuel card and fleet management operations, accident management company Cendant Claims Plus, corporate purchasing card company Cendant Business Partners, and third-party fleet management company Overdrive Business Solutions.