Cendant Corp. has paid $400 million to cancel a planned $3.1 billion merger with American Bankers Insurance Group Inc., a credit card insurance provider.

This makes two deals in two weeks Cendant has canceled.

The Parsippany, N.J.-based owner of brand names for dozens of services and three of the largest real estate brokerages in the United States -- ERA, Coldwell Banker and Century 21 -- paid Miami-based American Bankers $400 million to end the deal.

Cendant (NYSE:CD) had pushed back the deadline for its $67-a-share offer for American Bankers (NYSE:ABI) shares several times since March, most recently on Oct. 1. Cendant beat Los Angeles-based American International Group Inc. for American Bankers in a two-month bidding war.

Cendant's stock has dropped by 75% since it disclosed accounting fraud in April at the former CUC International Inc., which merged with HFS Inc. in December to form Cendant. Cendant likely would have had to borrow money to complete the American Bankers deal.

The announcement was made Tuesday after stock markets had closed. Before news broke of the merger's failure, American Bankers stock had risen 18 cents to $35.50, and Cendant's had risen $1.14 to $10.77.

Between March 17, when Cendant and American Bankers announced merger talks, and Monday, Cendant's shares had plunged to $9.63 from $40.69 and American Bankers shares had fallen to $35.31 from $65.69.

American Bankers Insurance Group sells wholesale credit-related specialty insurance. Financial institutions, retailers, automobile and manufactured-housing dealers, and agency representatives then retail these policies to consumers. Products include property insurance on items ranging from mobile homes to appliances, as well as life, unemployment, and disability insurance.

Last week, Cendant called off a $219 million deal to buy Providian Auto & Home Insurance Co., saying Providian's business no longer met its standards.

Last month, it delayed its planned purchase of the Royal Automobile Club Ltd. in London for $758.8 million for a British antitrust review.

"I think there may be some concern on the part of boards about the way prices have come down in the last couple of months," said Tom Brown, managing director of money management firm Rutherford Brown and Catherwood in Philadelphia. "But I am not sure that it means anything in the long run except that these deals were announced when the market was flying and now it's not."

Published: October 15, 1998

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