Stewart Information Services and Fidelity National Financial Terminate Merger

Fidelity National will pay Stewart a break-up fee of $50 million after the Federal Trade Commission challenged the merger.
Lauren MuskettSeptember 10, 2019

Fidelity National Financial announced plans on Tuesday to pay $50 million to Stewart Information Services to terminate the merger of the two companies after the Federal Trade Commission (FTC) challenged the merger.

Last week, the FTC issued an administrative complaint seeking to block insurance provider Fidelity National Financial’s planned $1.2 billion purchase of global real estate services company Stewart Information Services. The merger was first announced in March.

The FTC’s complaint cites that it would substantially reduce competition in the state markets for title insurance underwriting for large commercial transactions as its grounds for blocking the merger.

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Fidelity and Stewart are two of the four largest title insurance underwriters in the United States, along with First American Title Insurance Company and Old Republic National Title Insurance Company. On a national level, the four companies account for more than 85% of all title insurance sales.

The combined Fidelity-Stewart would account for more than 43% of the sector’s sales if they were allowed to merge, the FTC complaint said.

According to the FTC complaint, Fidelity is the largest, having gained that position through a series of acquisitions.

“While we were disappointed with the FTC’s decision regarding Stewart’s combination with Fidelity, we are well-positioned to execute on a standalone strategic plan built around growth and profitability,” said Stewart’s chairman Thomas Apel.

Stewart has also announced changes to its executive leadership to maximize the ongoing execution of its strategy. Effective immediately, current director Frederick Eppinger will become CEO.

Matthew Morris, who has served as CEO since 2011, will remain with the company and assume the role of president. John Killea, who has been president since 2017, will remain the general counsel and chief legal officer, roles he has held since 2008 and 2012, respectively.

“In light of the FTC decision against the merger, the Stewart Board has determined that leveraging the company’s strong brand, financial position, and valued employees to grow the organization as a standalone entity will create the greatest shareholder value,” Stewart said in a statement.