Slump May Force Renegotiation in Fidelity National-Chicago Title Merger
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A cyclical slump in the title insurance industry could force Irvine-based Fidelity National Financial Inc. to renegotiate the purchase price in its pending acquisition of rival Chicago Title Corp., analysts warned Friday.
But Fidelity officials called such speculation “premature” and reaffirmed their commitment to closing the $1.2-billion deal, the largest ever in the title industry.
“We’re on rock-solid ground,” said Fidelity President Frank Willey on Friday. The recent stock drops, he said, “don’t mean anything.”
Stock prices of both Fidelity and Chicago dropped this week, along with those of other large title insurers, largely because of concerns that rising interest rates will hurt the real estate industry.
But the decline in Fidelity’s stock, which hit a 52-week low Friday, could trigger a clause in the merger agreement that would require Fidelity to offer more cash or stock in order to make up the difference. If Fidelity refuses, Chicago has the right to call off the deal.
Fidelity shares closed Friday at $14, down 50 cents.
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