A.M. Best Comments on Fidelity National Financial, Inc.’s Acquisition of Lender Processing Services, Inc.
OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has commented that the ratings of Fidelity National Financial, Inc. (FNF) (Jacksonville, FL) (NYSE: FNF ) and its core title insurance subsidiaries remain unchanged following the group’s recent announcement that it has agreed to acquire Lender Processing Services, Inc. (LPS) (Jacksonville, FL) (NYSE: LPS ) , a leading provider of integrated technology, data, and services to the mortgage lending industry in the United States.
The acquisition of LPS will likely further enhance FNF’s franchise and leadership position in the title insurance and core real estate services industry by creating a larger, more diversified revenue base and have a more comprehensive product and services offering that will better balance the cyclical nature of the real estate industry. However, the proposed transaction will expose FNF to a level of execution risk associated with closing the deal successfully and in a timely matter. In addition, immediately following the acquisition of LPS, FNF’s financial leverage is expected to rise (but remain supportive of current rating levels) due, in part, to the increased debt that will be utilized to fund the transaction as well as the assumption of outstanding debt at LPS. Nevertheless, given FNF’s history of successfully acquiring and integrating companies within stated guidance and objectives and history of strong earnings, A.M. Best expects financial leverage will return to historical norms over the intermediate term.
The transaction is subject to approval by FNF and LPS stockholders, as well as federal and state regulators, and is expected to close in the latter part of 2013.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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A.M. Best Co.
Michael Russo, 908-439-2200, ext. 5372
Senior Financial Analyst
Michael Lagomarsino, CFA, 908-439-2200, ext. 5810
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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