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Fidelity National Financial To Buy Stewart Information Services In $1.2 Bln Deal

Fidelity National Financial, Inc. (FNF) said it has signed a merger agreement to acquire Stewart Information Services Corp. (STC) for $50.00 per share of common stock, subject to potential adjustment, representing an equity value of about $1.2 billion.

Fidelity noted that the consideration will be paid 50 percent in cash and 50 percent in Fidelity common stock.

Stewart said its shareholders will receive $25.00 in cash and 0.6425 common shares of Fidelity for each share of Stewart common stock they hold at closing, subject to the adjustment and election mechanisms.

Stewart stockholders will also have the option to elect to receive their consideration in all cash or all stock, subject to pro rata reductions to the extent the cash or stock option is oversubscribed. The Fidelity common stock component will be subject to a fixed exchange ratio.

For those Stewart stockholders who elect to receive all Fidelity stock, the exchange ratio will be equal to 1.2850, subject to potential adjustment and proration to the extent the stock option is oversubscribed.

Under the terms of the merger agreement, if the combined company is required to divest assets or businesses for which revenues exceed $75 million up to a cap of $225 million in order to receive required regulatory approvals, the purchase price will be adjusted down on a pro-rata basis to a minimum purchase price of $45.50 per share of common stock.

Fidelity said it intends to achieve at least $135 million in operational cost synergies and expects the acquisition to be at least 15 percent accretive to pro forma 2017 adjusted net earnings per share at that operational cost synergy target.

Closing of the transaction, which requires Stewart stockholder approval, is expected in the first or second quarter of 2019.

Stewart noted that if the deal is not completed for failure to obtain the required regulatory approvals, Fidelity is required to pay a reverse break-up fee of $50 million to Stewart.

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