No. 2 ranked Fidelity National announced an enormous, mother of all acquisitions in the title insurance industry on Friday, saying it will acquire No. 3 ranked LandAmerica. The Jacksonville, Florida-based Fidelity plans to acquire Richmond, VA based LandAmerica Financial Group Inc. for about $128 million in Fidelity stock. The acquisition will put many locally known subsidiaries, branded under the names of Chicago Title, Fidelity National Title,Ticor, Security Union, Alamo Title Insurance, along with LandAmerica brands American Title Company of Livingston, Atlantic Title & Abstract Company, Channel Islands Escrow, Inc., Commonwealth Land Title Company, Gateway Title Company, Golden Escrow, Inc., Gulf Atlantic Title, Land Title Agency, Inc., LandAmerica Albuquerque Title Company, Lawyers Title of Nevada, Rainier Title Company, Southland Title Corporation, StoneRidge Escrow Corporation, USA Title Affiliates, Inc. and others under one company umbrella that will control somewhat under 50% of the total title insurance market for the entire US market, passing the currently No. 1 ranked company for volume, First American Title.
Virtually all title companies, including Fidelity National and LandAmerica have taken drastic steps over the last year cutting jobs, closing offices and slashing dividends to curb losses under the debacle of the subprime mortgage meltdown scenario that resulted in the current credit freeze and seriously depressed real estate market. In response, Fidelity halved its dividend and cut over 1,000 job along with an across-the-board 10 percent pay cut for employees in the last quarter. LandAmerica was looking for a company to acquire it.
The joint announcement said that LandAmerica Chairman and CEO, Theodore Chandler will join Fidelity National’s Bill Foley as a vice chairman when the sale is complete. The headquarters of the company will remain in Jacksonville, FL. There will be some consolidation of back office activities, which probably will results in an increase in employment in the Jacksonville FL area. Fidelity employs about 500 people at its Riverside Avenue headquarters. Two other companies spun off from Fidelity employ about 2,500 in Jacksonville. Foley said there probably will be jobs lost in Richmond, VA as the merged company focuses on synergies and cost-cutting. Fidelity estimates 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.
Fidelity investors liked the value of the acquisition and shares of other major title insurers also rose Friday after news of the proposed merger. Fidelity’s stock rose $2.88 to $11.23 Friday after the deal was announced. LandAmerica, which had fallen to a record low on Thursday, rose $3.95 to $8.70 on Friday. Shares of competitors First American were up 18% while Stewart Title also increased 7%.
The company expects the deal to close by March 31, 2009.
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