Fidelity National Financial Inc. (FNF) announced yesterday that it has signed a merger agreement to acquire Stewart Information Services Corp. for $50 per share of common stock, subject to potential adjustment, representing an equity value of approximately $1.2 billion. The consideration will be paid 50 percent in cash and 50 percent in FNF common stock and the transaction is expected to close in the first quarter of 2019.
FNF intends to achieve at least $135 million in operational cost synergies and expects the acquisition to be at least 15 percent accretive to pro forma 2017 adjusted net earnings per share at that operational cost synergy target.
Stewart is one of the leading title insurance companies in the country, providing 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,” FNF Chairman William P. Foley II said in a statement. “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.”
Under the terms of the merger agreement, if the combined company is required to divest assets or businesses for which revenues exceed $75 million up to a cap of $225 million in order to receive required regulatory approvals, the purchase price will be adjusted down on a pro-rata basis to a minimum purchase price of $45.50 per share of common stock.
FNF currently intends to fund the $1.2 billion purchase price through a combination of cash on hand at FNF, debt financing and the issuance of FNF common stock to Stewart stockholders. Including the assumption of $109 million of Stewart debt, pro forma debt to total capital is expected to be no more than approximately 20 percent at the close of the transaction.
The closing of the transaction is subject to certain closing conditions, including Stewart stockholder approval, federal and state regulatory approvals and the satisfaction of other customary closing conditions.
