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LPS to Be Acquired by Former Parent

Fidelity, LPS announce acquisition

May 28, 2013

By Mortgage Daily staff

Nearly five years after it was spun-off as a separate company, Lenders Processing Services Inc. is being brought back into the fold of its former parent.

LPS operated as a division of Fidelity National Information Services Inc. until July 2, 2008, when it was divested in a public offering.

FNF noted in a subsequent filing with the Securities and Exchange Commission that it continued to do business with LPS. Among the services provided between the two firms were title agency services, information technology and real estate management.

On Tuesday, the Jacksonville, Fla.-based companies jointly announced that they struck a deal for Fidelity to acquire all of the outstanding common stock of LPS. Fidelity will pay $33.25 per common share.

The total acquisition is valued at around $2.9 billion, of which half will be paid in cash and the other half paid in shares of Fidelity.

The deal, which is subject to approval by stockholders of both companies, regulators and closing conditions, is expected to close in the fourth quarter.

Once the transaction is done, LPS will be merged with Fidelity-subsidiary ServiceLink into a consolidated holding company. Thomas H. Lee Partners LP will acquire a 19 percent interest in the new entity for approximately $381 million in cash.

A "go-shop" provision will allow LPS to actively solicit alternative acquisition proposals from third parties until July 7. If LPS backs out of the transaction with Fidelity, it will be liable for a break-up fee of 1.25 percent of the total equity value of $2.9 billion. The break-up fee jumps to 2.5 percent if LPS fails to hold a shareholders meeting or terminates the agreement after the expiration of the "go-shop" period.

"In addition, the acquisition agreement includes a break-up fee equal to approximately 2.5 percent of the total equity value if (i) a competing offer for LPS is made public by a third party, (ii) the acquisition agreement is terminated either as a result of the LPS shareholders voting against the transaction or the date of March 31, 2014, being reached and the LPS shareholders meeting not having been held or if LPS breaches its obligations which results in the failure of a closing condition and (iii) within twelve months after termination, LPS enters into or consummates any alternative transaction," the statement said.

Fidelity Chairman William P. Foley II noted in the announcement that the acquisition will make the company "the nation's leading title insurance, mortgage technology and mortgage services provider."

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