LandAmerica Financial Group today said it agreed to buy Capital Title Group for $251 million in cash and stock to diversify its business mix and expand in title insurance.
LandAmerica has agreed to acquire 100 percent of Capital Title’s common stock for an aggregate consideration of approximately $251 million, 80 percent of which will be paid in cash and 20 percent in LandAmerica common stock.
The purchase price represents a value of approximately $8 per share to Capital Title’s equity security holders.
Founded in 1981, Scottsdale, Ariz.-based Capital Title operates mainly in Arizona, California and Nevada. About 17 percent of its business relates to the providing of settlement services to mortgage lenders. The company has about 140 offices and more than 2,500 employees.
Capital Title earned income before-income taxes of approximately $37 million on record gross revenues of more than $380 million for the year ended Dec. 31, 2005. Total assets for Capital Title were in excess of $200 million and shareholders’ equity was approximately $111 million at Dec. 31, 2005.
The addition of Capital Title’s services will add scale to LandAmerica’s Lender Services platform, furthering its efforts to diversify its business mix, LandAmerica said in a statement.
LandAmerica, based in Richmond, Va., has more than 900 offices and 10,000 agents. It said it expects the purchase to add 4 percent to 6 percent to earnings in 2007, and result in $12 million of cost savings within one year. LandAmerica said it expects to borrow about $100 million to fund the purchase.
Regulators and Capital Title shareholders must approve the purchase.