(Reuters) - Financial services provider Fidelity National Financial Inc (FNF.N) said on Monday it would buy insurer Stewart Information Services Corp (STC.N) in a $1.2 billion deal to strengthen its residential and commercial title insurance business.
Fidelity’s offer of $50 per share represents a 23 percent premium to Stewart’s closing stock price on March 16. Stewart Information’s shares were up nearly 15 percent at $46.70 in premarket trading, while those of Fidelity national were up 3.3 percent.
Houston-based Stewart Information’s main title insurance business guarantees property owners have title to their property and can legally transfer it in the event of a sale.
The insurer was the target of activist investors in 2016 and had to add new directors to its board to appease investors who were concerned about declining revenue at the company.
A year later, the company said it was looking at strategic alternatives, including a sale.
Fidelity expects savings of at least $135 million from the deal.
Citi was the financial adviser to Stewart and Davis Polk & Wardwell LLP was its legal adviser.
Reporting by Diptendu Lahiri in Bengaluru; Editing by Saumyadeb Chakrabarty