As part of its strategy to focus on travel and residential real estate, Cendant Corp. today said it plans to spin off its mortgage and fleet operations. The transaction will be structured as a tax-free distribution of the common stock of PHH Corp., which is the wholly owned subsidiary where Cendant mortgage resides.
The spin-off is expected to close in the first quarter of 2005. Cendant’s relocation business will remain a part of Cendant.
Cendant’s mortgage business, operating as Cendant Mortgage, is the sixth largest originator of home loans.
The company said it would enter into a joint venture with Cendant Mortgage to preserve the cross-selling opportunities that exist between the mortgage business and Cendant’s residential real estate, relocation and settlement services businesses.
In July, Cendant announced it was in discussions with a potential buyer of its mortgage business, but did not reveal the buyer’s name. After the first announcement, some observers speculated that home loan giant Countrywide Financial was the expected buyer.
In August, Cendant Corp. ended talks with the unnamed potential buyer, but at the time the company said that it was still looking to sell the mortgage business. The company also said it was continuing to receive proposals and holding preliminary discussions with other parties about the sale of its mortgage business, and was considering other strategic alternatives to the business.
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