Cendant to Complete American Bankers Buy
Cendant Corp. reaffirmed its intention to complete the $3.1-billion purchase of American Bankers Insurance Group Inc. even after a plunge in the value of shares it expects will pay for almost half of the acquisition. Parsippany, N.J.-based Cendant, which sells franchises for Avis car rental, Ramada Inn hotels and Century 21 real estate brokerages, agreed to buy the Miami-based insurer in March for $67 a share. Fifty-one percent of the purchase was planned as a cash tender offer, and the rest as a swap of Cendant shares. The company’s stock has tumbled 60% since the agreement, after revelations April 15 and Tuesday of fraudulent accounting practices in Cendant’s membership businesses. Analysts doubt that Cendant can keep using its stock in such transactions. The purchase is expected to be completed during the fourth quarter. Cendant’s shares were unchanged at $15.81, and American Bankers’ shares rose 31 cents to close at $58.31. Both trade on the New York Stock Exchange.