Shareholders approved the move, as well as the 1-for-10 reverse split that will help bump the new company's share price out of penny-stock status and into the high teens.
Cendant was a bulky conglomerate. Even before the emancipation of Realogy and Wyndham, Cendant had closed on a $4.3 billion deal to sell its Travelport travel services and had rolled off its PHH (NYSE:PHH) mortgage business.
The sum of the parts once attracted Motley Fool Inside Value guru Philip Durell to recommend the stock as undervalued, but he recently cooled on the company now that the divestiture has been completed.
Will investors like riding in Cendant's shiny new CAR? The recent spinoffs haven't set the market on fire, and the rental-car business sports far from glamorous growth. Avis Budget already has a presence in 50 different countries, so a bet on Avis Budget Group is a wager on improving operations instead of an upstart company with barren airports left to occupy.
Reverse stock splits also have a spotty history. Rarely do you have a case like Priceline (NASDAQ:PCLN), in which a company that is humbled by a reverse split bounces back. Investors should keep that in mind, but they should also cut Avis Budget Group a break next week, as Cendant's slide below $2 a share was tied to its massive breakup and not a massive loss in value.
So Avis Budget Group won't necessarily be a lemon, but do yourself a favor and kick the tires so you know exactly what you're buying into.
Cendant is a former recommendation of theMotley Fool Inside Value newsletter service.
Longtime Fool contributor Rick Munarriz does not own any shares in this company, but he may look into some of Cendant's parts once the dust settles. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.
