The $1.2 billion merger of Fidelity National Financial and Stewart Information Services just hit a major stumbling block, as New York’s top financial regulators recently told the title insurance companies that it does not approve of their merger.
According to Securities and Exchange Commission filings from both companies, the New York Department of Financial Services recently notified the companies that it does not approve of Fidelity National’s acquisition of Stewart’s New York title operation.
Specifically, the companies say that the NYDFS recently provided written notice of disapproval of Fidelity’s application to acquire control of Stewart Title Insurance Company, Stewart’s title insurance company that is only licensed in New York.
According to the companies, receiving approval from the NYDFS is a condition of the merger being finalized, which means the deal can’t be completed without the NYDFS signing off on it.
In its filing, Stewart said that the companies are working actively to satisfy all of the regulatory conditions that must be achieved before the deal can be closed, including working with the Federal Trade Commission, the Texas Department of Insurance, and the NYDFS.
“As part of that process, the parties intend to reach out to the NYDFS to discuss the notice and seek to resolve the concerns raised therein, with which they respectfully disagree,” Stewart said in its filing.
The companies originally announced the deal in March 2018. The deal, if approved, would bring together two of the biggest names in title insurance.
Fidelity is already one of the nation’s largest title insurance and settlement services providers. Stewart also provides appraisal and valuation services and other offerings to the real estate industry, beyond being one of the biggest title insurance companies.
Under the terms of the deal, Stewart shareholders will receive $25 in cash and 0.6425 common shares of Fidelity for each Stewart share of Stewart they own.
According to Fidelity National Chairman William Foley, if the merger is finalized, Stewart would operate under the Fidelity umbrella, along with the company’s other title brands, which include Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title, and National Title of New York.
According to the companies, 28 states have approved the deal, but New York is not among them.