Shares in Stewart Information Services Corp (NYSE:STC), the Texas-based title insurer, jumped almost 10% in morning trade on Monday on the back of reports that it would be taken over by Fidelity National Financial Inc (NYSE:FNF) in a deal valued at about US$1.2bn.
Looking to ramp up its title insurance business, Fidelity, a big mortgage provider based in Jacksonville, Florida, will pay US$50 for each Stewart share, with the payment split evenly between cash and Fidelity stock.
The news pushed Stewart’s stock up 9.6% to US$44.60 in Monday’s trading session and Fidelity National Financial's stock also climbed 7% to US$41.90.
Savings of at least US$135mln
The deal is set to close by the first half of next year. Shareholders of Stewart, who must approve the deal, are being offered the option to elect to receive their payouts in all cash or all stock, so long as demand can be met.
Fidelity hopes to see savings of at least $135mln from the deal.
Two years ago, Stewart came under scrutiny from its activist investors over its declining revenues and was forced to appoint new directors to its board. Based in Houston, Stewart offers title insurance to property owners and businesses as well as loan origination and loan review services.