Exhibit 99.1
HFS INCORPORATED [LOGO] CUC INTERNATIONAL [LOGO]
FOR IMMEDIATE RELEASE
CUC INTERNATIONAL INC. AND HFS INCORPORATED
TO COMBINE IN MERGER OF EQUALS,
CREATING WORLD'S LEADING CONSUMER SERVICES COMPANY
TAKES ADVANTAGE OF "SEAMLESS FIT" AND EXPERTISE IN
DELIVERING PRODUCTS AND SERVICES
TO CONSUMERS AND BUSINESSES
COMBINED COMPANY TO HAVE MARKET CAPITALIZATION
OF APPROXIMATELY $22 BILLION
CROSS-MARKETING OPPORTUNITIES WILL FUEL GROWTH
Stamford, CT and Parsippany, NJ, May 27, 1997 -- CUC
International Inc. (NYSE:CU) and HFS Incorporated (NYSE:HFS)
announced today a definitive agreement to merge the two
companies in a tax-free exchange of shares. The combined
company, to be named at the closing of the transaction, will be
a leading provider of consumer and business services worldwide.
It would have had combined 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
in calendar 1996, and a market capitalization of approximately
$22 billion.
HFS is a leading global services company with a base
of 100 million consumers, operating through well-known brands
such as Avis, Days Inn, Resort Condominiums International,
Ramada, Coldwell Banker and Century 21. CUC, with over 68
million memberships worldwide, is a leading member services and
direct marketing organization offering value and convenience to
consumers in shopping, travel, dining, local merchant
discounts, auto and home buying and many other services.
Cross-marketing opportunities between CUC and HFS are expected
to increase further revenue and profit growth.
Pursuant to the merger agreement, 2.4031 shares of
CUC International common stock will be exchanged for each share
of HFS Incorporated 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 has been unanimously approved by both
companies' Boards of Directors and requires the approval of the
shareholders of both companies. It is subject to customary
closing conditions, and is expected to be completed in the Fall
of 1997.
SHARED, POWERFUL BUSINESS MODEL OFFERS SUBSTANTIAL
OPPORTUNITY FOR GROWTH
Henry R. Silverman, Chairman and Chief Executive
Officer of HFS Incorporated, said, "This transaction creates a
world-class consumer services company with extraordinary
revenue and
profit growth potential. By combining HFS's brands and our
consumer reach of more than 100 million customers annually with
CUC's direct marketing expertise, powerful club membership
delivery system, and 68 million memberships worldwide, we will
create tremendous new opportunities that are not available to
either company on its own. In so doing, we have the combined
potential for exceptional earnings and shareholder value
creation for two companies that have already established
excellent records in this regard. Walter Forbes and his
management team have created one of the most innovative and
successful companies in the history of the services industry.
We are confident that by combining our operating, financial and
management strengths, we will create one of the foremost
consumer and business services companies in the world."
Walter A. Forbes, Chairman and Chief Executive
Officer of CUC International Inc., said, "Together, we will
benefit from this unique franchise: providing value-added
services to consumers and businesses while substantially
enhancing growth opportunities. With similar business models,
both companies have pursued two sides of the same high-growth
strategy: helping smaller players, both individuals or
businesses, to compete in a global, information-intensive and
increasingly competitive economy. The combined company will
have increased purchasing power and other advantages associated
with greater scale."
SHARED MANAGEMENT; NO EMPLOYEE REDUCTIONS PLANNED
Following the merger, Henry Silverman will serve as
President and Chief Executive Officer of the combined company,
and Walter Forbes will be Chairman of the Board of Directors.
On January 1, 2000, Mr. Forbes will become President and CEO
and Mr. Silverman will become Chairman. The two companies will
have equal representation on the combined company's Board of
Directors with a super-majority voting requirement in effect
for certain governance matters.
E. Kirk Shelton, President and Chief Operating
Officer, Christopher K. McLeod, Executive Vice President,
Kenneth A. Williams, Vice Chairman, and Robert T. Tucker,
Corporate Secretary, all of CUC, will be Vice Chairmen of the
combined company. John D. Snodgrass, Vice Chairman, President
and Chief Operating Officer of HFS, and Stephen P. Holmes,
Robert D. Kunisch and Michael P. Monaco, each Vice Chairmen of
HFS, will also serve as Vice Chairmen of the combined company.
Mr. Monaco will serve as Chief Financial Officer of the
combined company, with Cosmo Corigliano, Chief Financial
Officer of CUC, becoming CFO after a transition period. Mr.
Monaco will then assume certain operating responsibilities.
James E. Buckman, Senior Executive Vice President of HFS, will
be General Counsel of the combined company until 2000, when Amy
N. Lipton, Senior Vice President and General Counsel of CUC,
will assume that role.
Both companies will continue to maintain their
respective operations in Parsippany, NJ, New York City and
Stamford, CT, as well as other major sites nationwide. Small
corporate headquarters staffs will be maintained at each
location.
Since the transaction is anticipated to result in
considerable new growth opportunities, it is not expected that
there will be any reductions in employment at either company as
a result of this transaction.
COMPANIES TO DEVELOP SPECIFIC CROSS-MARKETING,
GROWTH OPPORTUNITIES
The companies have already joined together in the
extremely successful Transfer Plus program, which markets CUC's
travel service to the more than 60 million consumers who stay
at HFS's eight hotel brands an average of three to four times
annually. Expansion of this partnership
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represents only one aspect of the many growth opportunities
that will emerge from the HFS-CUC alliance, which include:
- Direct marketing of CUC services to HFS's 100
million-strong consumer base who use its travel and
real estate services and can be introduced to CUC's
existing core of more than 20 individual and discount
membership programs, such as Travelers Advantage,
Shoppers Advantage, and Entertainment discount coupon
books, and its innovative new NetMarket interactive
product.
- Accelerating growth opportunities by combining HFS's
Preferred Alliance products and services with CUC's
marketing infrastructure and core competencies to
sell to both companies' consumer bases.
- Linking HFS's one million annual home buyers and
sellers, served by Coldwell Banker, Century 21 and
ERA, with CUC's CompleteHome Service, which provides
home improvement, repair and upkeep information, a
referral database of more than 8000 contractors and
tradesmen and other services for homeowners. CUC's
direct marketing capability will dramatically
increase the combined company's ability to assist
these consumers in the numerous purchasing decisions
typically made by new home buyers, such as health
care providers, dry cleaners, house painting,
hardware, repair services and more.
- Building on vehicle leasing opportunities through a
combination of CUC's Wright Express unit, the leading
provider of information and financial management
services to motor vehicle fleets throughout the U.S.,
and HFS's recently acquired PHH fleet management
service, the second largest fleet management company
in the U.S.
- Combining HFS's industry-leading corporate relocation
service, which relocates 100,000 employees and their
families a year, with CUC's "New Mover" services,
such as Welcome Wagon, Getting to Know You and
Entertainment, which provide coupons and offers from
local merchants to new residents.
- Combining CUC's industry-leading capability for
online transactions with HFS's outstanding brands.
For example, CUC's successful electronic real estate
classified service, RentNet, could serve as a model
for application to HFS brand websites, such as
Coldwell Banker and Century 21.
- Accelerating worldwide growth opportunities by
combining HFS's international products and services
with CUC's marketing infrastructure and more than two
million international memberships. The combined
company will have operations in 181 countries.
Using similar business models and philosophies of not
owning fixed assets or significant inventory, CUC's and HFS's
branded membership-based and franchised services are associated
with billions of dollars in consumer transactions each year.
The companies are also highly successful at balancing the
competing needs of thousands of vendors, while concentrating on
providing the best buying opportunities possible to customers.
HFS Incorporated reaches approximately 100 million
consumers annually as a leading franchisor of brand name
hotels, residential real estate, and car rental operations. In
real estate, HFS's Century 21, Coldwell Banker and ERA brands
have about 12,500 franchised offices with more than 180,000
brokers and agents in the United States and internationally.
HFS provides mortgage services to consumers and is the global
leader in corporate employee relocation. In travel, the
company has nearly 5,400 Days Inn, Howard Johnson, Knights Inn,
Ramada, Super 8, Travelodge, Villager Lodge and Wingate Inn
franchised hotels with more than 500,000 rooms in the United
States and internationally. HFS, also the franchisor of Avis,
is the leading provider of
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vacation timeshare exchanges through RCI and is the second
largest vehicle management services provider worldwide.
For 1996, including PHH which was acquired in 1997 as
a pooling of interests, HFS had pro forma revenues of
approximately $2 billion and pro forma net income of $309
million, or $1.75 per share. It has about 30,000 employees.
Currently, HFS has approximately 181 million shares
outstanding.
CUC International Inc. is a leading membership-based,
consumer services company that provides access to travel,
shopping, auto, dining, timeshare exchange, financial, and
other services to 68 million consumers worldwide through its
more than 20 services, including Shoppers Advantage, Travelers
Advantage, Entertainment, AutoVantage and other brands. CUC
works in partnership with leading banks, retailers, oil
companies, credit unions, charities, and other organizations to
offer consumers convenience and significant savings when
purchasing a wide array of high-quality goods and services.
CUC is also the largest educational and entertainment software
publisher, through its Davidson & Associates, Sierra On-Line,
Knowledge Adventure, and Blizzard Entertainment subsidiaries.
In addition, the company is one of the largest interactive
retailers in the world. CUC has approximately 15,000
employees.
For the year ended January 31, 1997, CUC reported
revenues of $2.3 billion. CUC reported net income of $283
million and earnings per share of $0.70, both before one-time
charges related to transaction and restructuring costs and
certain litigation matters related principally to the
completion of the Sierra On-Line, Inc., Davidson & Associates,
Inc. and Ideon Group, Inc. acquisitions. For the year ended
January 31, 1997, the weighted average number of shares
outstanding was 405.1 million.
Bear Stearns & Co. acted as financial advisor to HFS,
and Goldman, Sachs & Co. was financial advisor to CUC.
This release contains certain forward-looking
statements that involve potential risks and uncertainties. The
companies' future results could differ materially from those
discussed herein. Factors that could cause or contribute to
such differences include, but are not limited to, changes in
market conditions, effects of state and federal regulations and
risks inherent in international operations. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of today. The companies
undertake no obligation to revise or update these forward-
looking statements to reflect events or circumstances that
arise after today or to reflect the occurrence of
unanticipated events.
Contacts
CUC INVESTOR/ANALYST HFS INVESTOR/ANALYST
Laura Hamilton Mike Wargotz
Tuesday Only: 212/272-6718 Tuesday Only: 212/272-6362
Ongoing: 201/965-5114 Ongoing: 201/359-5110
CUC MEDIA HFS MEDIA
Don Nathan, Elliot Bloom
Robinson Lerer & Montgomery Ongoing: 201/952-8414
Tuesday Only: 212/272-6718
Ongoing: 212/484-7782
Jim Fingeroth,
Kekst and Company
Tuesday Only: 212/272-7403
Ongoing: 212/521-4819
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