In keeping with a theme I started, another interesting spinoff idea came through my inbox the other day. Fidelity National Finance
According to data from E*Trade
According to the S-1 statement, the title insurance group earned $531 million (about 42%) of those aforementioned dollars during those same 12 months. Based on the P/E of 5.2, the market is valuing the title insurance business at around $2.76 billion on a trailing basis.
The five businesses that compose the title insurance group -- Alamo Title, Chicago Title, Fidelity National Title, Security Union Title, and Ticor Title -- collectively command a 31% share of their market. But how is the market evaluating their competitors? Investors Title Company
Obviously, P/E is partly based on expectations of growth, profitability, and other factors. But at first glance, it's clear that Fidelity National's management believes the market doesn't fully appreciate the value of its title insurance businesses -- otherwise, why spin them off?
Assuming a maximum P/E of 9.2, the spinoff could be worth nearly $4.5 billion. It's too early to say whether the new company might actually be trading at a 50% discount, but there's certainly enough motivation to dig deeper and find out.
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