February 7, 2020 / 12:14 PM / in 18 days

UPDATE 2-U.S. insurer Fidelity National to buy FGL Holdings in $2.7 bln deal

(Adds share move, background)

Feb 7 (Reuters) - Fidelity National Financial Inc said here on Friday it would acquire U.S. annuities and life insurance firm FGL Holdings Inc in a deal valued at $2.7 billion, as it seeks to expand beyond its core business of insuring property buyers and sellers against ownership claims.

Shares of FGL were up 1.2% in premarket trading. On Thursday, the stock closed up 19.4% after Reuters reported that the companies were nearing a deal.

Under the terms of the cash-and-stock deal, the holders of FGL's shares may elect to receive either $12.50 per share in cash or 0.2558 of a share of the FNF stock for each share of FGL they own, representing a premium of about 3% to FGL's Thursday close.

The deal, expected to close in the third quarter of 2020, is anticipated to increase Fidelity's earnings per share by 10% in 2020 and by 20% in 2021.

Des Moines, Iowa-based FGL, in which Fidelity currently has a 7.9% stake, generated $1.55 billion in revenue in the first nine months of 2019, up 68% year on year.

FGL was acquired in 2017 in a $1.84 billion deal by an investor group led by a so-called special purpose acquisition company founded by veteran dealmaker Chinh Chu, as well as funds affiliated with private equity firm Blackstone Group Inc and Fidelity National Financial.

"(FGL's) management team and unique, deep relationship with Blackstone provides meaningful differentiation from competitors," Fidelity said. Blackstone will continue to invest in FGL's assets on the combined company's behalf.

Blackstone is expected to keep a stake in the combined company, Reuters reported on Thursday, citing sources.

Based in Jacksonville, Florida, Fidelity provides title insurance and transaction services to the real estate and mortgage industries. Title insurance protects buyers and sellers against problems with a property's title that might cause a transaction to be canceled.

The company reported revenue of $6.1 billion for the first nine months of 2019, up 3.5% from a year earlier.

Credit Suisse served as financial adviser to FGL and BofA Securities and Trasimene Capital advised Fidelity. (Reporting by Bharath Manjesh in Bengaluru; Editing by Maju Samuel)

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