Cendant Corp. said Tuesday it will start a $2.7 billion tender offer for American Bankers Insurance Group Inc., topping the $2.2 billion American International Group Inc. agreed to pay for the company.
Stamford-based Cendant offered $58 a share in cash and stock for American Bankers, which sells credit life insurance in banks and extended-service warranties in retail outlets.
AIG, the largest U.S. financial company, based on market value, offered stock worth $47 a share to investors in Miami-based American Bankers last month.
Credit insurance, which covers debt repayments when a borrower dies or is disabled, “is a product category we need to be in,” Cendant’s president and chief executive, Henry Silverman, said in a conference call. “Our customers want it.”
In response to Cendant’s offer, New York-based AIG said it will use an option under the terms of its agreement with American Bankers to buy19.9 percent of the company at $47 a share. The company said it will do “everything it can to complete the transaction.”
Cendant was formed by last year’s merger of direct marketer CUC International Inc. and HFS Inc., the owner of the Ramada and Days Inn hotel brands, as well as Coldwell Banker real estate and Avis car rental brands. It is expanding by acquisitions, and offers its goods and services over the telephone and the Internet.
American Bankers shares jumped $9.62, to $55.87; Cendant fell 87 cents, to $33.44, and AIG rose $3.12, to $111.12.
Cendant said it’s making a tender offer because American Bankers’ agreement with AIG barred the target from talking to other bidders for 120 days after the Dec. 21 agreement.
