Posted By Cliff Tuttle | December 20, 2008
Posted by Cliff Tuttle
There had been talk that the Feds might intervene on antitrust grounds in the acquisition of Lawyers Title Insurance and Commonwealth Title Insurance by Fidelity National Financial. There seemed to be plenty of reasons for such an objection, since the conglomerate would control almost 50% of the title insurance business in the nation and much more in certain markets, such as Pennsylvania.
However, the legal waiting period under the Hart Scott Rodino Act expired on Thursday at midnight without intervention, paving the way for the merger to progress.
As readers of PLBT know, FNF declined to acquire LandAmerica because of the potential liability and losses incurred by its 1031 subsidiary, which was unable to bring escrow funds to closing on Section 1031 like kind exchanges because some of the funds had been invested in securities for which there was no market. However, the deal was repackaged, with LandAmerica and its 1031 subsidiary filing bankruptcy. Arrangements were announced at the time of filing to sell Lawyers and Commonwealth, plus another title insurer, United Capital, to FNF out of Bankruptcy. This way, FNF gets to buy the LandAmerica crown jewels without incurring a big liability. LandAmerica gets to ditch its 1031 company and everybody (almost) gets to live happily ever . . well, you get the idea.
As our readers also know, the Nebraska Insurance Commissioner, Ann Frohman also had to bless the deal. The two title companies are domiciled in Nebraska, which ironically makes the Nebraska Department of Insurance their prime regulators. She approved the FNF acquisition on Monday. She also approved a competing bid by Stewart Title to acquire the two LandAmerica subsidiaries, but the Bankruptcy Court in Richmond Virginia quickly killed that deal. The United Capital acquisition must still be approved by California regulators.
The acquisition of Lawyers and Commonwealth is anticipated to be approved in the Bankruptcy Court on Monday, December 22. Merry Christmas!
Crisis brings opportunity. As the President remarked, we might not bail out failing companies in normal times. Acquisitions that prevent venerable American institutions like Lawyers Title and Commonwealth Title from going down in flames are welcomed with open arms. Roll over, TR.
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