Fidelity National Financial Cleared to Acquire FGL in USD 2.7bn Deal.
M2 EQUITYBITES-May 27, 2020-Fidelity National Financial Cleared to Acquire FGL in USD 2.7bn Deal
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Florida, US-based title insurance company Fidelity National Financial, Inc. (NYSE: FNF) has received all regulatory approvals and clearances necessary to close the acquisition of and annuity and life insurance products provider FGL Holdings (NYSE: FG), the company said.
The anticipated closing date for the transaction is June 1, 2020, assuming that F and G shareholders approve the merger and related proposals at the F and G extraordinary general meeting scheduled to be held virtually on May 29, 2020, and subject to the satisfaction or waiver of customary conditions at the closing.
In February, Fidelity National Financial agreed to acquire FGL Holdings for USD 12.50 per share of common stock, representing an equity value of approximately USD 2.7bn.
Based on F and G's adjusted earnings for the twelve months ended September 30, 2019, the transaction is expected to be more than 10% accretive (on a pro-forma basis) to FNF's 2020 earnings per share and more than 20% accretive to FNF's 2021 earnings per share.
FNF currently owns 7.9% of F and G's outstanding ordinary shares and all of F and G's series B Preferred shares, and will acquire the remaining F and G series A preferred shares, with a face value of approximately USD 321m as of December 31, 2019.
Under the terms of the merger agreement, holders of F and G's ordinary shares (other than FNF and its subsidiaries) may elect to receive either USD 12.50 per share in cash or 0.2558 of a share of FNF common stock for each ordinary share of F and G they own.
This is subject to an election and proration mechanism such that the aggregate consideration paid to such holders of F and G's ordinary shares will consist of approximately 60% cash and 40% FNF common stock.
FNF will issue approximately 24m common shares to F and G shareholders, which include FNF underwriters, representing approximately 7% of FNF's pro forma diluted shares outstanding.
Including the assumption of F and G's USD 550m of senior notes due 2025, FNF's pro forma debt to total capital is expected to be approximately 26% at the close of the transaction.
FNF's current dividend and buyback policy will remain unaltered as a result of the proposed transaction.
The acquisition of F and G offers FNF entry to an industry with strong secular growth tailwinds that FNF expects will perform well in economic...
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