Fidelity National Financial will merge its mortgage processing unit with credit and debit processor Certegy in a deal that will give Fidelity majority control of the new publicly traded entity, the companies said today.
Fidelity said it expected the new company to pull in revenue at a rate of nearly $4 billion a year and pegged its earnings before interest, taxes, depreciation and amortization at $1 billion.
The name of the combined company will become Fidelity National Information Services Inc. and will trade on the New York Stock Exchange under the symbol “FIS.” Fidelity National Chairman and Chief Executive William Foley II will be chairman of the new company, while Certegy Chairman and CEO Lee Kennedy will be CEO of the new company.
Shares of Fidelity National rose more than 3 percent to $42.90 and Certegy’s shares jumped more than 20 percent to $40.35 on Thursday morning in the wake of the deal.
Fidelity National said the combination would spawn many cost-savings opportunities – particularly in regard to the service of community banks and credit unions. Certegy provides credit, debit, check risk management and cash access services to more than 6,500 financial institutions and 100,000 retailers.
Fidelity National Information Services will exchange each of its shares for 0.6396 of a share of Certegy, the companies said, which valued each FIS share at $25.78 based on Certegy’s most recent trading price.
FIS shareholders will own 67.5 percent of the new company, while parent Fidelity National will directly retain a 50.3 percent stake.
St. Petersburg, Fla.-based Certegy will pay its shareholders a special dividend of $3.75 per share in cash before the deal closes, the companies said.
The headquarters for the combined company will be in Jacksonville, Fla.
Fidelity National’s information services unit provides financial institution processing, mortgage loan processing and related information products and outsourcing services to financial institutions, mortgage lenders and the real estate industry.
The deal requires approval from Certegy’s shareholders.
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