Fidelity National Financial Inc.
) concluded the much awaited buyout of
Lender Processing Services Inc.
), on the stipulated date. The purchase consideration equated to
$37.14 per share out of which $28.10 per share was paid in cash
while the remaining $9.04 in Fidelity National shares. Therefore,
the exchange ratio stood at 0.28742. In order to pay the stock
component of the consideration, Fidelity will issue 25.9 million
shares to the former Lender Processing shareholders.
Concurrently, Moody's Investors Service, the credit rating wing
), affirmed the "Baa3" debt ratings of Fidelity and the "A3"
insurance financial strength (IFS) ratings of its insurance
subsidiaries, with a stable outlook. Moreover, the rating agency
upped the debt rating on the 5.75% senior unsecured notes of
Lender Processing to "Baa3" from "Ba2".
The rating affirmation came on the back of Fidelity National's
financial leverage maintained at low levels even after the
culmination of the Lender Processing acquisition and addition of
In Dec 2013, this deal received all the necessary approvals -
from the Federal Trade Commission (FTC) and the shareholders of
Lender Processing. Following the completion of the deal, the
ServiceLink business of Fidelity will merge with Lender
Processing to form a new consolidated holding company. Fidelity
National will retain an 81% stake in the new holding company and
sell the remaining 19% for a cash consideration of $381 million
to the funds associated with Thomas H. Lee Partners, L.P.
The combination of a leading insurer and a paramount data and
analytics service provider is expected to create an entity that
will prove accretive to the future earnings of Fidelity National.
The Zacks Consensus Estimate for 2014 is currently pegged at
$2.01, representing a year-over-year improvement of 6.8%.
Moreover, addition of Lender Processing Services to its portfolio
will ensure a diversified and recurring revenue base for Fidelity
Fidelity currently carries a Zacks Rank #1 (Strong Buy). Among
other players in the property and casualty insurance space,
Allied World Assurance Company Holdings, AG
), with the same Zacks Rank as Fidelity, looks promising.
ALLIED WORLD AS (AWH): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
LENDER PROC SVC (LPS): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
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