Fidelity National Financial Inc. has agreed to buy Lender Processing Services Inc. for about $2.82 billion in order to broaden and diversify its business.
Lender Processing is a Jacksonville, Fla.-based technology company that services the mortgage and real estate industries. Fidelity National, also based in Jacksonville, Fla., provides title insurance, mortgage and other services.
Fidelity National will pay $33.25 per share, a 1 percent premium to Lender Processing's Friday closing price of $32.89. The companies put the cash-and-stock deal's total equity value at approximately $2.9 billion.
Lender Processing currently has about 84.9 million outstanding shares, according to FactSet.
Fidelity National will pay 50 percent of the transaction in cash and 50 percent in stock. It anticipates issuing about 57.4 million shares of its stock to Lender Processing shareholders, or about 20.2 percent of its outstanding stock.
Fidelity National said that it will combine its ServiceLink business with Lender Processing into a new holding company once the buyout is complete. Fidelity National then plans to sell a 19 percent equity stake in the holding company for $381 million to funds affiliated with Thomas H. Lee Partners LP. Fidelity National will keep the remaining interest in the holding company.
The deal allows Lender Processing to actively seek out third-party alternative bids until July 7. Fidelity National would receive a break-up fee under various circumstances, including if Lender Processing ends its agreement with Fidelity National in favor of a superior proposal received during the "go-shop" period.
The transaction is expected to close in the fourth quarter. It still needs approval from both companies' shareholders.
Shares of Fidelity National added 12 cents to $26.30 in premarket trading on Tuesday. Lender Processing's stock gained 26 cents to $33.25 before the market open.