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AIG matches bid for ABI
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March 2, 1998: 6:05 p.m. ET
Financial service giant meets Cendant offer; Cendant mulls increased bid
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NEW YORK (CNNfn) - American International Group Inc. agreed to match a $58-a-share bid for the credit-related insurer American Bankers Insurance Group Inc., boxing rival Cendant Corp. into a hostile takeover corner.
Under its revised agreement, AIG would boost its bid by $11 to $58 a share, for a new total of $2.7 billion. As a result, American Bankers has postponed two shareholders meetings, initially set for later this week, to March 25 and 27.
Late Monday, Cendant's Chief Executive Officer Henry Silverman said it still may raise its bid in the next few weeks but added it believes its bid remains competitive.
AIG and Cendant (CD) have been pitted against one another in a takeover fight that has had Cendant battling to scuttle a $2.2 billion deal between AIG (AIG) and Miami-based ABI reached in December.
Under both AIG's and Cendant's plans, about half of the purchase price would be paid in stock.
To help attain its goal, Cendant, a consumer services company, agreed in early February to pay the $66 million breakup fee American Bankers (ABI) would have been required to pay AIG for pulling out of the merger. At the same time, Cendant began distributing proxy materials to ABI shareholders asking them to reject AIG's offer which, at $47 a share, was 23 percent lower than Cendant's bid.
Cendant also filed a federal lawsuit to ensure that American Bankers' shareholders had an opportunity to consider its offer.
Despite the equal values of the bids, American Bankers has made no secret of its preference for AIG, an industry superstar that is among the leading underwriters of commercial and industrial insurance in the United States.
Calling AIG's offer "the superior alternative" for ABI, R. Kirk Landon, American Bankers' chairman, said, "AIG is a strong, experienced, well-capitalized and well-positioned industry partner for us."
Seeking to erect a cordon sanitaire around the agreement, AIG and ABI agreed to raise the breakup fee to $100 million, from $66 million.
AIG is the leading U.S.-based international insurance organization, with member companies in about 130 countries writing property, casualty, marine, life and financial services insurance. Last year, AIG reported nearly $26 billion in sales.
Stamford, Conn.-based Cendant, by contrast, is a relative newcomer to consumer services, having been formed in December by the merger of HFS Inc. and CUC International Inc.
Both companies are intent on snagging American Bankers' wholesale credit-related specialty insurance products, which have attained a wide appeal among investors who shun traditional forms of insurance.
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