Fidelity National to Acquire LandAmerica
One day after postponing its third quarter earnings report, title insurer LandAmerica Financial Group, Inc. (LFG) said Friday morning it would be acquired by competitor Fidelity National Financial Inc. (FNF), the first major merger/acquisition to hit the title insurance side of the business as a result of the nation's housing crisis. The all-stock deal is valued at about $128.4 million, according to a statement by the firms ahead of market open on Friday; LandAm shareholders will receive 0.993 shares of Fidelity National stock. The combination will create a behemoth title insurer, controlling roughly half of the entire market, and allowing Fidelity National to finally leapfrog past The First American Corp. (FAF) in market share. Together, LandAm and Fidelity National represented 46.3 percent of the market during 2007. The deal comes amid speculation that LandAmerica may have been in trouble, and the particulars of the announced deal make it clear that the rumors were true: FNF subsidiary Chicago Title Insurance Co. will provide a $30 million credit facility to LandAm "as a means of potential additional liquidity," according to a press statement. Advances under the facility are secured by $155 million in par value of auction-rate securities held by LandAm, Fidelity National said. "The unprecedented credit freeze and depressed real estate market have negatively impacted our business to the point that it has become increasingly difficult for LandAmerica to remain an independent public company," said LandAmerica chairman and CEO Theodore Chandler, Jr. Fidelity National chairman William Foley, II said in a statement that the merger should bring at least $150 million in operational costs savings between the two firms, but did not specify how many jobs would be lost through the merger. LandAm's Chandler will join Fidelity National's board of directors as a vice chairman when the deal is complete, both companies said. No expected date was provided for the merger to be completed. Write to Paul Jackson at firstname.lastname@example.org.