Fidelity to buy mortgage service provider LPS for $2.9 bn

28 May 2013

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Fidelity National Financial Inc (FNF), a Fortune 500 company, today said it would buy mortgage service provider Lender Processing Services Inc (LPS) for around $2.9 billion in cash and stock.

FNF is offering to pay $33.25 per LPS share, representing a premium of 19 per cent to the average 30-day closing price of LPS shares. LPS share price has risen a little over 13 per cent since the Wall Street Journal reported on 23 May that both were in talks over a potential deal.

FNF will pay half the deal value in cash and the rest in stock. Post completion of the deal, FNF plans to merge its ServiceLink business with LPS, and sell a 19 per cent stake in the combined company to private equity firm Thomas Lee Partners for about $381 million.

A completed deal would make LPS once again a unit of FNF after being spun off in 2008.

"We have significant experience and familiarity with LPS from our previous ownership of these businesses. This combination will create a larger, broader, more diversified and recurring revenue base for FNF and makes us the nation's leading title insurance, mortgage technology and mortgage services provider,'' said FNF chairman, William Foley II.

''We have set a target of $100 million for cost synergies and are confident that we can meet or exceed that goal. Including those cost synergies, the transaction is 11.3 per cent accretive to pro-forma 2012 net earnings," he added.

Florida-based LPS is a provider of mortgage and consumer loan processing services, mortgage settlement services, default solutions and loan performance analytics, as well as solutions for the real estate industry, capital markets investors and government offices.

Having been in the business since nearly half a century when it first began offering computing and statistical services, LPS clients include most of the country's top 50 banks.

The company employs around 8,000 people and has a market value of $2.5 billion.

FNF is the US largest provider of commercial and residential mortgage and diversified services. It generates approximately $7 billion in annual revenue from its title and real estate related operations.

FNF also owns minority stakes in Ceridian Corp, a leading provider of global human resources, payroll, benefits and payment solutions, Remy International, a designer and manufacturer of aftermarket and original equipment electrical components for automobiles, light trucks, heavy-duty trucks and other vehicles, and American Blue Ribbon Holdings, owner and operator of the Village Inn, Bakers Square and Max & Erma's restaurants.

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