Cendant also said it paid ABI $400 million in cash as part of the termination agreement. In a statement, no reason was given for abandoning the deal, which was threatened by the steep drop in Cendant's stock earlier this year following highly publicised accounting irregularities at Cendant.

In a separate announcement, Cendant said it would take an after-tax charge of $280 million in the fourth quarter for the ABI payment and for other costs for the aborted deal.

A stock repurchased plan was also announced by Cendant to buy back $1 billion worth of its common stock.

Cendant shares rallied in after-hours trading, rising to $11, from $9.375, while ABI stock gained $2 to $35.50.

"We are pleased to resolve the uncertainty created in the market regardingthe potential impact of the ABI transaction on our capital structure," said president and chief executive of Cendant, Henry Silverman.

Cendant signed a deal in March to buy ABI for $67 a share in cash and stock, which at the time ended a bitter two-month bidding war with insurance conglomerate American International Group Inc(AIG).

An AIG spokesperson had no immediate comment on the Cendant announcement.

Cendant faced regulatory hurdles in Florida and the two companies had talked about possibly changing the terms of the deal to include more cash and less stock.

Shares of Cendant tumbled this year and the company was forced to revise down its results for the last three years after uncovering massive accounting irregularities at one of the companies that merged to form Cendant.

CUC International merged with HFS Inc last December to form Cendant, which has a portfolio of brands that range from Century 21 real estate brokerages, Avis rental cars and Howard Johnson motels.

Without the ABI deal, Cendantsaid it can focus on closing its $750 million acquisition of UK-based RAC Motor Services, which it expects to complete in 1999. The deal would create a leading company in the British roadside assistance market.

Silverman said that Cendant had $1.8 billion in undrawn bank credit facilities, $1 billion in cash, net of the ABI payment, and what it described as significant free cash flow.