Conditions Met, Fidelity Closes On LandAm Deal
Monday marked the close of a tenuous chapter for the acquisition talks between Fidelity National Financial Inc. (FNF) and its purchasee-to-be, a group of offshoots from the title insurance branch of LandAmerica Corp. Fidelity first announced Monday that the Chapter 11 Bankruptcy Court amended its terms related to the acquisition of LandAm's insurance underwriters, reducing the total purchase price for Commonwealth Land Title Insurance Co. and Lawyers Title Insurance Corp. to approximately $235 million. Fidelity then promptly announced it had closed the acquisition of Commonwealth and Lawyers, as well as United Capital Title Insurance Co. "The acquisition of these established title insurance franchises is an historic opportunity for FNF," said chairman William Foley II. "This combination creates the largest title insurer in the United States, with pro forma 2007 market share of approximately 46 percent and dominant positions in both the residential and commercial markets. We will have an unrivaled balance sheet, including an investment portfolio of approximately $5.5 billion and reserve for claim losses that will exceed $2.3 billion. We are thrilled to welcome these underwriters and their employees, agents and customers into the FNF title insurance family and are confident that Commonwealth, Lawyers and United will provide significant contributions to our ongoing goal of continually creating value for our shareholders." The long road to a happy ending Fidelity last week unveiled a three-step plan it expected to be executed within certain deadlines, under threat of a withdrawn purchase offer. Fidelity said it expected on Dec. 15 to receive approval from the State of Nebraska Department of Insurance regarding the acquisition — which it announced later Dec. 15 that it had received. Fidelity also said it expected by Dec. 16 a decision by the Chapter 11 bankruptcy court regarding the amended stock purchase from LandAmerica, which filed for bankruptcy protection on Nov. 26. Lastly, Fidelity said it expected to hear by Dec. 18 whether the Federal Trade Commission would approve of the purchase. Each step of the process completed in time -- fortunately for LandAm, whose insurance underwriters will be bought out from bankruptcy. All in all, it makes for a happy ending for LandAm just days before the Christmas holiday. But it was a rough week in which another suitor -- Stewart Title Guaranty Co., of Stewart Information Services Corp. (STC) -- withdrew its own offer to purchase LandAm subsidies. A look into the past month shows a sketchy history on the Fidelity acquisition. First, LandAm delayed the release of its third-quarter earnings on Nov. 5, then the acquisition was announced two days later. When LandAmerica’s third-quarter earnings were finally released Nov. 10, the reason for the delay — and for Fidelity’s intercession — became clear: LandAmerica posted a $600 million net loss. It proved too much loss for Fidelity to stomach: It called off the merger on Nov. 21. The failed deal, along with plunging stocks that followed when investors gave up on the company, forced LandAm to seek bankruptcy protection under Chapter 11. On Dec. 12, Fidelity announced it had reached an amended stock purchase agreement to acquire the title insurance underwriters out of the now-bankrupt LandAmerica for $282 million. The announcement Monday of amended acquisition terms means Fidelity has saved approximately $47 million by waiting so long to close the acquisition. Visit www.fnf.com/fnf/ and www.landam.com for more information. Write to Diana Golobay at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.