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Cendant steps up ABI bid
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February 12, 1998: 2:22 p.m. ET
Company says it will pay $66M breakup fee if ABI pulls out of AIG deal
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NEW YORK (CNNfn) - In its pursuit of American Bankers Insurance Group Inc., Cendant Corp. is prepared to pay the little-known insurance marketer's $66 million fee to break out of its merger agreement with American International Group Inc.
The $2.2 billion deal, reached in December, provides that American Bankers must pay a $66 million cash fee to AIG if it pulls out of the merger.
"We went in knowing we might have to, said Steven Wolitzer, an investment banker at Lehman Brothers who is representing the Parsippany, N.J.-based Cendant.
"We came prepared to play and, if that's the deal, that's the deal. We didn't go into it egregiously," Wolitzer said.
On Thursday, Cendant unleashed its latest maneuver to wrest ABI away from AGI.
The Stamford, Conn.-based Cendant, a consumer services company, said it has begun distributing proxy materials to ABI (ABI) shareholders asking them to reject AIG's offer and instead accept Cedant's rival offer of $2.7 billion, or $58 per share.
"Cendant is going directly to ABI shareholders, asking them to vote against the proposed merger with AIG, and send a strong message to the Board that shareholders will act to preserve their ability to accept the clearly superior value provided by the Cendant offer," the company said.
ABI, which is headquartered in Miami, Fla., markets credit-related insurance while New York City's AIG is one of the world's largest insurance underwriting firms.
Cendant (CD) also announced Thursday it had filed a suit in the U.S. District Court for the Southern District of Florida to ensure that American Bankers' shareholders are allowed to consider Cendant's offer.
"The highly unusual and restrictive conditions in the agreement between AIG and ABI, prohibiting any discussions between ABI and other interested bidders until 120 days following the date of that agreement, has precluded Cendant from discussing its proposal with the ABI Board," Cendant said in a statement.
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