The last major obstacle to Fidelity National Financial Inc.’s $282 million acquisition of LandAmerica Financial Group Inc.’s two largest underwriting subsidiaries fell at midnight Thursday, as federal antitrust regulators allowed a legal waiting period to expire without intervening in the deal.
The waiting period is a requirement for large mergers and acquisitions, imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976. By allowing the waiting period to expire without requesting further information about the deal, the Federal Trade Commission and Department of Justice signaled their approval of Fidelity’s plan to acquire Lawyers Title Insurance Corp. and Commonwealth Land Title Insurance Co.
The deal — announced in conjunction with LandAmerica’s Nov. 26 filling for Chapter 11 bankruptcy protection — puts Fidelity on course to become the nation’s largest title insurance underwriter, with a roughly 45 percent market share. Together, Fidelity and current industry leader First American Corp. would control about 74 percent of the U.S. title insurance business, based on market share in the first three quarters of 2008.
In a press release today, Fidelity said it must still obtain a final approval order from the Nebraska Department of Insurance removing Commonwealth and Lawyers from receivership before the deal can close, on or before Dec. 22.
But that’s considered to be largely a formality, as Nebraska regulators gave their blessing to the sale Monday, ruling that Fidelity — which has committed to providing $157 million to recapitalize Lawyers and Commonwealth — was in strong enough financial condition to take over the underwriting companies.
Nebraska regulators made a similar finding that Stewart Title Guaranty Co. was able to take over Lawyers and Commonwealth, but the U.S. Bankruptcy Court for the Eastern District of Virginia on Tuesday approved LandAmerica’s proposal for an expedited sale of Lawyers and Commonwealth to Fidelity (see story).
On Nov. 18, the Nebraska Department of Insurance informed Commonwealth and Lawyers that it had determined the underwriting companies were in a "hazardous financial condition" after LandAmerica Financial Group borrowed millions of dollars from the companies to cover shortfalls at another subsidiary that facilitates 1031 property exchanges.
In approving the terms of a sale of Lawyers and Commonwealth to Fidelity, Nebraska regulators said that industry consolidation must be weighed against the risk to Lawyers and Commonwealth policyholders.
Fidelity has also agreed to pay about $16 million for a third LandAmerica underwriter, United Capital Title Insurance Co. That deal, which is subject to approval by California regulators, is expected to close in the first quarter of 2009.
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