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AIG steps aside for Cendant
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March 18, 1998: 3:07 p.m. ET
AIG gives Cendant five days to reach agreement with American Bankers
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NEW YORK (CNNfn) - American International Group Inc. said Wednesday it will step aside and give Cendant Corp. a shot at negotiating a buyout of American Bankers Insurance Group Inc., a prize sought eagerly by both firms.
AIG and Cendant have been bidding ever higher for ABI, a Miami-based direct marketer of credit-related insurance. Cendant raised the stakes as recently as Monday, when it announced a bid of $67 a share, or $3.1 billion. That beat a rival bid from AIG of $58 per share, or about $2.7 billion.
On Wednesday, ABI announced that AIG agreed to waive until March 23 provisions of the merger agreement it reached with ABI in December. Those provisions precluded ABI from dumping its agreement with AIG and entering into another merger before May 20.
Should Cendant and ABI reach a merger agreement, some of AIG's disappointment should be muted by the fact that the Miami-based insurer will receive a termination fee of $100 million from ABI, along with $10 million in merger-related fees from Cendant.
AIG's chances were decreased Tuesday after ABI announced that its board of directors had deemed Cendant's current offer to be "superior" to AIG's. It then told its financial advisers to begin an in-depth look into a deal with Cendant.
If Cendant (CD) and American Bankers (ABI) fail to reach an agreement by March 23, AIG (AIG) and Cendant will resume their opposition to each other's buyout applications.
As a result of this turn of events, the Florida Department of Insurance, whose approval was necessary for any deal, has adjourned AIG's and Cendant's oppositions in public hearings scheduled for this week.
However, Cendant said it will continue plans to present its application for regulatory approval on March 19.
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AIG
ABI
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