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PARSIPPANY, N.J. -- Cendant Corp. may use more cash and less stock to pay for its planned $3.1 billion acquisition of American Bankers Insurance Group Inc., according to a recent Securities and Exchange Commission filing.
In the Aug. 17 filing, Cendant said it "may modify the mix of consideration to increase the cash position depending on the value of the company's common stock pricing" among other conditions.
A Cendant spokesman, however, said no decision on changes in the agreement had been reached yet, nor had Cendant set any date for a decision as of last Wednesday.
Under the terms of an agreement reached in March, Cendant -- a travel, real estate and marketing conglomerate -- is to pay $67 per ABIG share: 51% in cash and 49% in Cendant stock.
But with Cendant's stock price having fallen steeply in recent months, investors have called on the company to change the terms of the acquisition, which must be approved by the Florida Insurance Department.
Cendant could use revenues generated by sales of business units if it decided to increase the cash portion of the ABIG transaction. Earlier this month, the company announced it would divest its interest in its Cendant Software Corp. and Hebdo Mag International Inc. subsidiaries. Cendant also said that it had entered into a definitive agreement to sell Hebdo to its former 50% owners for $7.1 million in stock and about $410 million in cash.
A Florida Insurance Department spokeswoman said Cendant would have to notify the department of changes in the acquisition terms and that as of Aug. 19 it had received no such notification.
A. Michael Frinquelli, a partner and insurance analyst at Renaissance Fund Advisers in New York, said Cendant's experience with a falling stock price might cause more companies to put more cash into acquisition deals, especially in the insurance industry.
"It would not be an unhealthy development," he said. Especially "in the insurance industry, where you have a long lag time (on deals), you run that kind of risk that your stock will go down."
American International Group Inc., which held a merger agreement with ABIG before losing a bidding war to Cendant, probably would not get involved in any further bidding, Mr. Frinquelli said. AIG might get back in only if Cendant dropped out completely, he said.
AIG had no comment.