NEW YORK— Cendant Corp. has officially acquired Galileo International, giving it a foothold in the airline industry and a top-five rated travel website— Trip.com, which will be morphed into Cendants new travel portal. The acquisition, which is expected to close in the Fall of 2001, is currently valued at $33 per share, or $3.5 billion, which includes $2.9 billion in cash and stock and the assumption of $600 million of Galileos net debt. The deal is still subject to approval from Galileo stockholders. The merger comes after a long search by the board of directors at Galileo to develop a strategy that would enhance shareholder value. “We felt our shares were trading well below what we believe to be their true value,” said James Barlett, chairman/president/CEO of Galileo. The companys shares are currently trading at $31.55. Barlett said the acquisition by Cendant will hopefully maximize Galileos shareholder value, due to the number of synergies already existing between the two entities. “Galileo brings its extensive global presence, solid customer relationships, the ability to deliver innovative technological goods to customers, and the valuable Internet asset— Trip.com,” he said. He added that Cendant brings with them, “extensive travel industry experience, leading brands, and very strong marketing capabilities.” But the real jewel in the crown for Cendant is the acquisition of a fully developed and proven successful travel distribution website, which can serve as Cendants long talked about travel portal. “Well take the Trip.com URL and that will be the URL for our portal,” said Samuel Katz, Cendants chief strategic officer. “Well take their array of tools, which will reduce the cost of building a portal and will create more cash for customer acquisition.” In fact, the acquisition of Trip.com will free up the $95 million that was set aside by Cendant to develop its travel portal. “Well now take some of that, which we no longer need for technology development because its already been done by Trip.com, and use it for our advertising, marketing, and customer acquisition budgets,” said Henry Silverman, Cendants chairman/president/CEO. Silverman added that the inventory that already exists in Trip.com will augment Cendants inventory to create a travel portal, which he expects to propel to the No.3 most visited travel website within the next six months. “[Trip.com] is already the No. 4 or 5 most visited travel site,” he said. “We expect our travel portal should be one of the top three by fall or the end of this year.” That could mean serious competition for some of the existing travel distribution websites, such as Travelocity, Expedia, and Orbitz. “Orbitz is a competitor in the online travel agency industry,” said Katz. “Being that it is powered by Worldspan, their technology for bypassing GDSs hasnt commenced yet; theyll only begin testing the connection late this year with a couple of their airline partners.” He added that he was unsure whether Orbitz would be able to compete with the GDSs. “Whether Orbitz will be anything other than a very successful travel agency thats online, will depend on whether theyll have the depth of choice in terms of inventory and availability.” He added that currently Galileo conducts 7,000 transactions per minute, and that it was still undetermined whether Orbitz “could scale to the level of a GDS.” In addition, since Orbitz is owned by five of the major airlines, Katz feels that limits the site in terms of international flights. “When Orbitz wants airlines in Asia, Africa, and South America, its the GDSs that are probably the only ones that can provide that,” he said. “That might change their strategy of trying to be a GDS bypass.” In addition, Cendant is also rumored to be in negotiations to acquire Worldspan, which powers Orbitz, creating a possible antitrust investigation. Though Silverman was quick to note th
