Fidelity National Financial Inc, the US title insurer, in an announcement said that it would be purchasing Lender Processing Services Inc. The price for the purchase would be US$2.9 billion to be paid in both cash and stock.
The purpose of the acquisition is for FNF to expand its mortgage servicing business. The offer pegs each LPS share at US$33.25, which includes a 19% premium from the average thirty day closing values of the LPS shares on the bourse. Due to the announcement, LPS shares jumped by 3% to US$33.90 in early day trading. Overall, the share values have increased by 13% in value since the Wall Street Journal broke the story of the pending deal.
According to the insurer, subject to some final adjustments, half of the amount would be paid in cash while the rest would be paid in FNF shares of stock.
FNF expects to issue about 20% of its diluted shares or about 57.4 million shares to cover the stock component of the deal. Upon the completion, LPS would be merged with FNF's ServiceLink business. It also intends to sell nearly 19% of the combined company to Thomas H. Lee Partners, the private equity firm for US$381 million.
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