Market Overview

Shares of Fidelity National Financial Edge Higher Following News Adjustment to Consideration Mix for LPS Bid, Raises Cash Component by $511M

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Fidelity National Financial, Inc. (NYSE: FNF), a leading provider of title insurance, mortgage services and diversified services, today announced that it was exercising its option to further adjust the consideration mix in the previously announced merger with Lender Processing Services, Inc. (NYSE: LPS) by increasing the cash component of the total consideration by approximately $511 million and correspondingly decreasing the stock component of the total consideration by an equal amount.  The total consideration will be unchanged.

Based on today's announcement, FNF will now pay approximately 82% of the total consideration for the LPS shares of common stock in cash and 18% in shares of FNF common stock, subject to adjustment as described in the definitive agreement and below.

On May 28, 2013, FNF signed a definitive agreement under which FNF will acquire all of the outstanding stock of LPS for $33.25 per common share, for a total equity value of approximately $2.9 billion.  The consideration was to be paid 50% in cash and 50% in common stock of FNF.

On June 19, 2013, FNF announced an adjustment to the consideration mix by increasing the cash component of the total consideration by approximately $500 million and correspondingly decreasing the stock component of the total consideration by an equal amount.  Based on that June 19, 2013 announcement, FNF was to pay approximately 67% of the total consideration for the LPS shares of common stock in cash and 33% in shares of FNF common stock, subject to adjustment as described in the definitive agreement and below. 

Under the terms of the merger agreement, LPS stockholders currently have the right to receive a certain number of shares of our common stock equal to a stated exchange ratio and $22.303 in cash, without interest, for each share of LPS common stock that they own. FNF has the option, pursuant to the merger agreement, to increase the cash portion of the per share merger consideration by up to $16.625 with a corresponding decrease in the stock portion of the merger consideration by providing written notice (referred to as the "adjustment notice") to LPS on or before the date that is three trading days prior to the anticipated effective date of the proxy statement/prospectus related to the merger. In connection with the previously announced equity offering, FNF has provided such an adjustment notice to LPS to further increase the cash portion of the per share merger consideration in an amount equal to $5.799 and to correspondingly decrease the stock portion of the merger consideration. As a result, subject to the terms and conditions of the merger agreement, and assuming consummation of the previously announced equity offering and the receipt of approximately $511 million in net proceeds therefrom, including the exercise of the over-allotment option, LPS stockholders will have the right to receive a certain number of shares of our common stock equal to the exchange ratio further discussed below and $28.102 in cash, without interest, for each share of LPS common stock that they own. If the average of the volume weighted averages of the trading prices of our common stock during the ten trading day period ending on (and including) the third trading day prior to the closing of the merger (the "average FNF stock price") is greater than $26.763, then the exchange ratio will be an amount equal to the quotient of (a) (x) the product of (1) 0.65224 multiplied by (2) the average FNF stock price minus (y) $11.477 divided by (b) the average FNF stock price. If the average FNF stock price is between $24.215 and $26.763, then the exchange ratio will be fixed at 0.20197. If the average FNF stock price is between $20.000 and $24.215, then the exchange ratio will adjust so that the value of the stock portion of the merger consideration is fixed (based on the average FNF stock price) at $4.891 per share of LPS common stock. If the average FNF stock price is less than $20.000, then the exchange ratio will be fixed at 0.24455.  As a result of FNF's election to further increase the cash component of the merger consideration and correspondingly decrease the stock component of the merger consideration, the transaction no longer requires the approval of FNF stockholders. 

 

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