The takeover of Houston-based Stewart Information Services by Fidelity National has fallen through after the Federal Trade Commission sought to block the proposed merger.
The FTC said that the acquisition would substantially reduce competition in state markets for title insurance underwriting for large commercial transactions, and in several local markets for title information services. It would reduce ‘The Big 4’ to 3 competitors.
Fidelity had agreed to buy Stewart in March 2018 for cash and stock worth $50.20. That valued the company at $1.2 billion at the time. Stewart’s shares are currently trading at $34.50 (market cap $800 million).
Fidelity has agreed to pay a $50 million termination fee to Stewart.
Stewart also announced that current director Frederick Eppinger will become CEO. However, current CEO Matthew Morris, who has been CEO since 2011, will remain with the company. He will assume the role of President.
CFO David Hisey was appointed to his position in September 2017. Interestingly Mr Hisey has some unique clauses in his employment contract. If Mr Hisey’s employment is terminated without cause within one year of naming a new CEO, he will get additional compensation above and beyond what he would normally get. According to the latest annual proxy, his severance package would be valued at $2.5 million versus $1.8 million normally.
If Mr Hisey were to voluntarily terminate his employment for ‘Good Reason’ within 180 days of the company naming a new CEO, he would get a severance package worth $1.3 million.
How long before he resigns?