Fidelity National Financial Inc (NYSE:FNF) agreed today to acquire Lender Processing Services, Inc. (NYSE:LPS) for about $2.9 billion.

Fidelity National Financial

Fidelity National Financial Acquisition Details

Title insurance, mortgage services and diversified services company, Fidelity National Financial Inc (NYSE:FNF) would acquire all the outstanding common stock of the mortgage and real estate data and analytics company, Lender Processing Services for $33.25 per common share. The definitive agreement announced today disclosed that Fidelity National Financial would pay 50 percent of the consideration for Lender Processing Services, Inc. (NYSE:LPS) shares of common stock in cash while the balance through Fidelity National Financial common stock.

The purchase price announced today  represents a premium of 19 percent and 25 percent respectively to the prior 30-day and 60-day average closing price of Lender Processing Services, Inc. (NYSE:LPS)’s common stock through May 22, 2013.

Lender Processing Services was spun off in 2008 from Fidelity National Information Services Inc (FIS.N). FIS was formed in 2006 in a merger between an FNF unit and Certegy Inc.

Lender Processing Services, Inc. (NYSE:LPS) provides services and technology to home lenders and servicers such as JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC) and Nationstar Mortgage Holdings Inc (NYSE:NSM).

The title insurance company expects meaningful synergies from the deal through elimination of some corporate and public company costs and the shared corporate campus through the similar businesses in centralized refinance and default related products.

The mortgage services company aims to achieve $100 million in cost synergies, and is confident of meeting or exceeding the goal. The deal is also 11.3 percent accretive to pro-forma 2012 net earnings, including the cost synergies.

The acquisition agreement includes a “go-shop” period effective through July 7, 2013, during which Lender Processing Services is permitted to actively solicit alternative acquisition proposals from third parties. The acquisition agreement contains a break-up fee equal to approximately 1.25 percent  of the total equity value of $2.9 billion payable to the title insurance company if Lender Processing Services terminates the acquisition agreement based on receiving a superior proposal during the “go-shop” period.

William P. Foley, Chairman of Fidelity National Financial Inc (NYSE:FNF), exuded confidence that FNF’s familiarity with Lender Processing Services, Inc. (NYSE:LPS) from their earlier ownership would create a larger and diversified revenue base for Fidelity National Financial. He hopes the deal would make FNF the country’s leading title insurance, mortgage technology and mortgage services provider.

Hugh Harris, President and CEO of Lender Processing Services feels with the mortgage industry continuing to face increasing regulation, industry participants look for partners offering comprehensive solutions. He hopes the combined entity would offer solutions to many of the challenges currently plaguing the industry.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC acted as financial advisors while Credit Suisse Securities (USA) LLC and Goldman, Sachs & Co. advised LPS.