The acquisition of
Lender Processing Services, Inc.
Fidelity National Financial, Inc.
) is approaching its final stage with the recent nod from the
Federal Trade Commission (FTC).
FTC has approved the deal on condition that Fidelity National
will divest its interest in a title plant in Portland, Oregon
within five months. The terms of the approval also include the
divestiture of a copy of Lender Processing's title plant assets
in six Oregon counties and Fidelity National's interest in a
title plant covering Portland, Oregon. Shares of Fidelity
National improved 2.9% to $32.94 on Dec 24 after the approval.
Florida-based Lender Processing is a leading provider of
comprehensive technology solutions and services, data and
analytics to the paramount mortgage lenders and investors of the
nation. Fidelity National on the other hand is a provider of
title insurance, mortgage and other services in Florida. In May
this year, Fidelity National inked a deal to acquire Lender
Processing for $2.9 billion or $33.25 per share. Fidelity
National will pay the purchase consideration in cash and FNF
common stock. The deal, which was previously scheduled to
conclude in the fourth quarter of 2013, is now expected to close
on Jan 2, 2014.
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.
Previously, the deal was approved by the shareholders of Lender
Processing in its Special Stockholder Meeting held on Dec 19,
2013. More than 98% of the voters had cast their votes in favor
of the deal, reflecting 78% of the outstanding shares.
Nevertheless, the deal was awaiting regulatory approvals and
satisfaction of closing conditions. Now, with the approval from
FTC, the deal has moved another step toward its culmination.
Fidelity National expects the acquisition to generate cost
synergies of more than $100 million and be accretive to future
earnings. 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 as well as a recurring
revenue base for Fidelity National. Fidelity National currently
carries a Zacks Rank #3 (Hold). With optimism over the
acqusition, we expect analysts to raise their estimates exerting
upward directional pressure on the Zacks Rank.
Some better-ranked stocks in the property and casualty
insurance space include
Cincinnati Financial Corp.
Allied World Assurance Company Holdings, AG
). Both stocks hold a Zacks Rank #1 (Strong Buy).
ALLIED WORLD AS (AWH): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
LENDER PROC SVC (LPS): Free Stock Analysis
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