Houston-based Stewart Information Services Corp. (NYSE: STC) and Jacksonville, Florida-based Fidelity National Financial Inc. (NYSE: FNF) have mutually agreed to cancel their merger agreement.
Fidelity would have acquired Stewart in the cash-and-stock deal, which was valued at $1.2 billion when it was announced on May 2018, but the former will now pay the latter a $50 million reverse termination fee.
The Sept. 10 announcement comes just days after the Federal Trade Commission filed a lawsuit to block the deal. Fidelity and Stewart are two of the four largest title insurance underwriters in the U.S., the FTC said in a Sept. 6 press release. The FTC alleged that “the merger would substantially reduce competition in-state markets for title insurance underwriting for large commercial transactions, and in several local markets for title information services,” the release states.
“While we were disappointed with the FTC’s decision regarding Stewart’s combination with Fidelity, we are well-positioned to execute on a standalone strategic plan built around growth and profitability,” Thomas Apel, Stewart’s chairman of the board, said in Stewart’s Sept. 10 press release.
Also in the release, Stewart announced that Matthew Morris, who has served as CEO since 2011, has assumed the role of president. Effective immediately, he was replaced as CEO by Frederick Eppinger, who has more than 35 years of experience in finance and strategic marketing in the insurance industry and has been a Stewart director since 2016. Most recently, he served as president, CEO and director of The Hanover Insurance Group, retiring in 2016. He also previously served as a partner for McKinsey & Co., a global management consulting firm.
Meanwhile, John Killea, who has been president of Stewart since 2017, will retain his roles as general counsel and chief legal officer.
“The actions we have taken today are designed to enhance our strength, focus our company on the opportunities before us and build a leadership team with the best mix of experience and expertise to drive value creation,” Apel said in the release. “To further support the new direction, we will be actively reviewing the Board’s makeup to ensure the appropriate mix of diversity as well as operational and growth-oriented experience.”
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