NEW YORK (
) -- Title insurance company
Fidelity National Financial
(FNF - Get Report)
said it will acquire mortgage technology provider
Lender Processing Services
, which it owned previously, for $2.9 billion in a cash-and-stock deal.
FNF will acquire all outstanding common stock of LPS for $33.25 per share and will pay 50% of the consideration in cash and 50% in stock. The purchase price represents a 19% premium to the 30-day closing average prior to May 22, when rumors of the potential deal hit the market causing both shares to surge.
On Tuesday, shares of LPS were trading higher by 0.8% at $33.25 per share in premarket trading, while Fidelity National was up 0.4% at $26.30.
FNF will combine its ServiceLink unit with LPS in a new consolidated holding company and sell a 19% stake to private equity firm Thomas H Lee Partners for $381 million in cash.
Under the terms of the deal, LPS has until July 7, 2013 to shop for other offers.
FNF chairman William P Foley, II said the acquisition will help create a "larger, broader, more diversified and recurring revenue base" for the company. The deal is expected to save $100 million in costs at least and Fidelity expects it to add 11.3% to 2012 earnings.
Fidelity National Financial spun off its financial services processing unit
Fidelity National Information Services
in 2006. In 2008, the latter spun off LPS.
-- Written by Shanthi Bharatwaj in New York.