JACKSONVILLE, Fla.,
Dec. 7, 2016 /PRNewswire/ -- Fidelity
National Financial, Inc. today announced that its Board of
Directors has approved a tax-free plan (the "Plan") whereby (1) it
intends to distribute all 83.3 million shares of Black Knight
Financial Services Inc. (NYSE: BKFS) common stock that it currently
owns to FNF Group (NYSE: FNF) shareholders and (2) it intends to
redeem all FNFV (NYSE: FNFV) tracking stock shares in exchange for
shares of common stock of FNFV. Following the distributions,
FNF, FNFV and BKFS will each be independent, fully-distributed,
publicly-traded common stocks, with FNF and FNFV no longer being
tracking stocks. FNF and BKFS should be eligible for index
inclusion in the S&P Midcap 400 and potentially the S&P
500.
The Plan is subject to the receipt of private letter rulings
from the Internal Revenue Service approving the distribution of
BKFS and FNFV shares, filing and acceptance of a registration
statement for both the BKFS and FNFV transactions with the
Securities and Exchange Commission, the refinancing of BKFS Senior
Notes, which are subject to the FNF guarantee, on reasonable terms,
BKFS and FNFV shareholder approvals and other customary closing
conditions. The closing of the tax-free distributions is
expected in the third quarter of 2017.
While FNF has the ability to distribute its BKFS holdings into a
new publicly traded company, the Plan currently contemplates that
FNF would distribute Black Knight Holdings, Inc. ("BKH"), a
wholly-owned subsidiary of FNF, to FNF shareholders and immediately
thereafter merge BKH with BKFS for BFKS common stock on a
one-for-one basis. The merger of BKH with BKFS would be
subject to BKFS shareholder approval. Assuming completion of
the BKH distribution and subsequent merger with BKFS, approximately
74% of the outstanding shares of BKFS common stock would be fully
distributed with no controlling shareholder. It is expected
that William P. Foley, II will
remain as the Chairman of FNF and Executive Chairman of BKFS.
"It has become clear that the complexity of our existing
corporate structure is holding back FNF's share price in general,
and the value of our industry-leading title business in
particular," said Chairman William P.
Foley, II. "We look forward to a stand-alone BKFS and
the potential value creation that an independent, more liquid BKFS
common stock offers for both FNF and BKFS shareholders. The
distribution of our BKFS holdings to FNF shareholders and the
distribution of FNFV to FNFV shareholders enables FNF to revert
back to a pure-play, title-only common stock, making FNF
index-eligible again and potentially significantly widening the
demand for FNF common stock."
All of FNF's current dividend payments and FNF share repurchases
are funded from non-BKFS sources. Following the BKFS
distribution, FNF would plan to maintain its current annual
dividend payment of $1.00 per share,
or approximately $280 million per
year. Based on the closing BKFS stock price of
$37.60 per share on December 6, 2016, FNF's holding in BKFS is valued
at approximately $3.1 billion, or
$11.23 per FNF share. Based on
FNF's closing stock price of $32.66
on December 6, 2016, FNF's title
group is implicitly valued at $21.43
per share. Maintaining FNF's $1.00 per share dividend and assuming a
$21.43 pro forma FNF stock following
the BKFS spin-off, FNF's pro forma dividend yield would be
approximately 4.7%, a 160 basis point improvement over the current
dividend yield of approximately 3.1%. In addition, FNF's
share repurchase program would be approximately 50% more
effective.
Additionally, the BKFS distribution will significantly reduce
FNF's debt to capital ratio from 28% as of September 30, 2016, to 17% on a pro forma basis
assuming BKFS refinances its Senior Notes. This decrease in
leverage will provide meaningful financial flexibility for FNF to
potentially embark upon a more aggressive stock repurchase program
after the completion of the tax-free spin-off of BKFS.
Further details will be disclosed in the future as progress is
made implementing the Plan towards an expected third quarter 2017
closing.
About Fidelity National Financial, Inc.
Fidelity
National Financial, Inc. is organized into two groups, FNF Group
(NYSE: FNF) and FNFV Group (NYSE: FNFV). FNF is a leading
provider of title insurance, technology and transaction services to
the real estate and mortgage industries. FNF is the nation's
largest title insurance company through its title insurance
underwriters - Fidelity National Title, Chicago Title, Commonwealth
Land Title, Alamo Title and National Title of New York - that collectively issue more title
insurance policies than any other title company in the United
States. FNF also provides industry-leading mortgage
technology solutions and transaction services, including MSP®, the
leading residential mortgage servicing technology platform in the
U.S., through its majority-owned subsidiaries, Black Knight
Financial Services and ServiceLink Holdings. FNFV holds
majority and minority equity investment stakes in a number of
entities, including American Blue Ribbon Holdings, LLC, Ceridian
HCM, Inc., Digital Insurance, Inc. and Del
Frisco's Restaurant Group, Inc. More information about
FNF and FNFV can be found at www.fnf.com.
Forward-Looking Statements
This press release contains
forward-looking statements that involve a number of risks and
uncertainties. Statements that are not historical facts, including
statements regarding our expectations, hopes, intentions or
strategies regarding the future are forward-looking statements.
Forward-looking statements are based on management's beliefs, as
well as assumptions made by, and information currently available
to, management. Because such statements are based on expectations
as to future financial and operating results and are not statements
of fact, actual results may differ materially from those projected.
We undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise. The risks and uncertainties which
forward-looking statements are subject to include, but are not
limited to: our ability to successfully consummate the Plan and
achieve the positive effects discussed in this press release;
changes in general economic, business and political conditions,
including changes in the financial markets; weakness or adverse
changes in the level of real estate activity, which may be caused
by, among other things, high or increasing interest rates, a
limited supply of mortgage funding or a weak U. S. economy; our
potential inability to find suitable acquisition candidates,
acquisitions in lines of business that will not necessarily be
limited to our traditional areas of focus, or difficulties in
integrating acquisitions; our dependence on distributions from our
title insurance underwriters as a main source of cash flow;
significant competition that our operating subsidiaries face;
compliance with extensive government regulation of our operating
subsidiaries; and other risks detailed in the "Statement Regarding
Forward-Looking Information," "Risk Factors" and other sections of
the Company's Form 10-K and other filings with the Securities and
Exchange Commission.
Additional Information and Where to Find It
This
communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. In connection with the proposed transaction, FNFV, BKH and
BFKS will file with the Securities and Exchange Commission ("SEC")
registration statements. BKFS's registration statement will also
include a proxy statement which will be sent to the BKFS
shareholders in connection with their vote required in connection
with the transaction. FNF will also file a proxy statement which
will be sent to the FNFV shareholders in connection with their vote
required in connection with the transaction. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENTS/PROSPECTUSES
AND PROXY STATEMENTS AND ANY OTHER RELEVANT DOCUMENTS, WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE TRANSACTION. Investors and security holders will be able
to obtain these materials (when they are available) and other
documents filed with the SEC free of charge from the SEC's website,
www.sec.gov. These documents (when they are available) can also be
obtained free of charge from the respective companies by directing
a written request to Fidelity National Financial, Inc., 601
Riverside Avenue, Jacksonville,
Florida 32204, Attention: Investor Relations, Telephone:
904-854-8100.
Participants in a Solicitation
The directors and
executive officers of FNF and other persons may be deemed to be
participants in the solicitation of proxies in respect of proposals
to approve the transaction. Information regarding the directors and
executive officers of FNF is available in its definitive proxy
statement, which was filed with the SEC on April 29, 2016. Free copies of this
document may be obtained as described in the preceding
paragraph.
FNF - G
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SOURCE Fidelity National Financial, Inc.