Fidelity National Financial, Inc. (FNF) has signed a merger agreement to acquire Stewart Information Services Corporation for a total consideration of US $1.2 billion.
FNF, which is the largest title re/insurer in the U.S, has offered Stewart $50.00 per share of common stock, and will pay the total consideration 50% in cash and 50% in FNF common stock.
The transaction will see FNF gain at least $135 million in operational cost synergies, and is expected to be at least 15% accretive to pro forma 2017 adjusted net earnings per share at that operational cost synergy target.
Stewart is a fellow U.S title re/insurer, and provides a range of residential and commercial title insurance, closing and settlement services, appraisal and valuation services, and other offerings to the real estate industry.
“We are excited to welcome Stewart, its employees and its customers to the FNF family,” said FNF Chairman William P. Foley, II.
He added: “The venerable Stewart brand has a long and respected history in the title insurance industry and we see tremendous potential in working with the Stewart management team to invest in and grow the Stewart brand on a national basis as part of our long-time, successful strategy of operating multiple title insurance brands under the FNF umbrella.”
Raymond Quirk, Chief Executive Officer (CEO) of FNF, said: “We are very familiar with Stewart in the marketplace and see multiple areas where we can assist and accelerate Stewart’s growth plans.
“We also believe there are significant operational efficiencies we can bring to bear by leveraging FNF’s shared services infrastructure that will provide meaningful long-term value creation opportunities for our shareholders.”
Stewart stockholders will be given the option to receive their consideration in all cash or all stock, with an exchange ratio equal to 1.2850 for those who opt for the stock option.
The merger agreement also specifies that if the combined company is required to divest assets or businesses for which the revenues exceed $75 million, the purchase price for the common stock will be proportionally adjusted to a minimum price of $45.50 per share.
FNF will fund the $1.2 billion transaction through a combination of cash on hand, the issuance of FNF stock, debt financing, and the assumption of $109 million of Stewart debt.
The acquisition is expected to be completed in the first or second quarter of 2019, although it remains subject to federal and state regulatory approval and Stewart stockholder approval.
