Travel giant HFS to merge with CUC

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CUC International and HFS Inc., operator of such companies as Avis, Days Inn, Ramada, Coldwell Banker and Century 21, said they will merge in a tax-free exchange of shares. The combined company, to be named at the closing of the transaction, will have had combined 1996 revenues of approximately $4.3 billion, net income of nearly $600 million and free cash flow of approximately $700 million based on pro forma performance, and a market capitalization of approximately $22 billion.

The deal meshes two consumer marketing powerhouses. CUC operates a variety of direct marketing and club membership programs, including a travel program that it markets to visitors to HFS properties. HFS has built a portfolio of travel and real estate ventures it hopes will benefit from CUC's marketing expertise.

CUC will exchange 2.4031 shares of its common stock for each share of HFS common stock. CUC will issue approximately 434 million common shares, valued at about $11 billion. Following the transaction, the combined company will have approximately 870 million shares outstanding. The transaction will be accounted for as a pooling-of-interests. The current shareholders of each company will own approximately 50% of the combined company.

The transaction is expected to be completed this fall.

Copyright May 1997, Crain Communications Inc.

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