Fidelity settles with FTC on LPS purchase
Agreement green-lights planned acquisition/merger
The Federal Trade Commission has settled with Fidelity National Financial, Inc. (FNF) on a complaint over the title giant's proposed $2.9 billion acquisition of mortgage technology and services provider Lender Processing Services (LPS), according to a statement from the FTC on Tuesday.
The FTC had originally objected to the merger, saying that the proposed combination of Fidelity and LPS' title plant assets in six Oregon counties, including the Portland area, would substantially lessen competition in violation of U.S. antitrust laws.
Title plants are databases used by abstractors, title insurers, title insurance agents, and others to determine the title status of real property. Title plant users access this information to establish the chain of title and make other determinations in order to underwrite and issue title insurance policies.
Oregon law requires title insurers to own an interest in a title plant in each county in which they issue policies, a requirement that creates a barrier to entry for new firms seeking to provide title insurance underwriting.
The proposed LPS acquisition would eliminate one of only a few available title plants in six Oregon counties, the FTC argued, and make it possible for Fidelity and only one other underwriter to exclude competing firms from having an interest in a joint title plant in the Portland metropolitan area.
Under terms of the proposed settlement, Fidelity will sell a copy of LPS’s title plants in six Oregon counties and an ownership interest equivalent to LPS’s share of a jointly owned title plant in the Portland, Oregon, metropolitan area. These divestitures are designed to counteract the likely anticompetitive effects of the transaction, while preserving any efficiencies that might arise from the combination of Fidelity and LPS.
Fidelity will sell it's title interests to an FTC-approved acquirer, the regulator said in a statement. The proposed order also requires Fidelity to notify the FTC in advance prior to acquiring any title plants in Oregon.
The settlement with the FTC removes one of the last major barriers preventing the proposed acqusition of LPS, first announced on May 28, 2013, from moving forward.
While no timetable for the deal has been formally announced, industry sources tell HousingWire they expect the LPS/Fidelity transaction to be complete in very early January 2014. Additional work integrating the two companies will take an additional quarter to complete.
Fidelity also announced on December 10 that it was seeking what it called "strategic options" for non-core businesses under the title giant's corporate umbrella. While the company did not specify a timeline or what assets it might be looking to divest, market observers largely viewed the announcement as tied to the LPS acquistion -- as a number of business lines at LPS and Fidelity replicate one another.
LPS was originally spun off from a separate Fidelity spin-off, Fidelity National Information Services, Inc. (FIS) in July 2008.