Agreement Signed: LandAmerica to Acquire Capital Title Group, Inc.
|March 29, 2006|
Strengthens Presence in Key Western States
RICHMOND, Va. and SCOTTSDALE, Ariz., /PRNewswire-FirstCall/ -- Theodore L. Chandler, Jr., President and CEO of LandAmerica Financial Group, Inc. (NYSE: LFG), a leading provider of real estate transaction services, and Donald R. Head, Chairman, President and CEO of Capital Title Group, Inc. (Nasdaq: CTGI), jointly announce that their respective companies have signed an agreement pursuant to which LandAmerica will purchase Capital Title Group, Inc. (Capital Title), a title insurance underwriter, agent, and settlement services provider, subject to approval by Capital Title's shareholders and receipt of all required regulatory approvals.
Founded in 1981, Capital Title operates primarily as a title underwriter and agent in Arizona, California and Nevada. In addition to title and closing services, about 17 percent of Capital Title's business mix includes settlement services to mortgage lenders. The addition of these services will add scale to LandAmerica's Lender Services platform, furthering its efforts to diversify its business mix. Currently, Capital Title has over 2,500 employees and operates approximately 140 offices. In 2005, Capital Title was named to Fortune magazine's top 100 fastest growing companies for the second consecutive year.
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 $8.00 per share to Capital Title's equity security holders. LandAmerica anticipates that approximately 50 percent of the cash consideration will be generated from available cash and 50 percent from additional borrowings.
Capital Title earned income before income taxes of approximately $37 million on record gross revenues of more than $380 million for the year ended December 31, 2005. Total assets for Capital Title were in excess of $200 million and shareholders' equity was approximately $111 million at December 31, 2005. Capital Title's operating results are expected to be accretive by 4 to 6 percent to LandAmerica's earnings in 2007. It is expected that within one year after the close of the transaction, synergies will produce annual run rate pretax cost reductions of approximately $12 million.
Donald R. Head, Chairman, President and CEO of Capital Title Group, Inc. stated, "We have a great deal of respect for LandAmerica's position as a national leader in real estate transaction services. We believe their multiple underwriter culture parallels Capital Title's philosophy. Joining a company with $3.9 billion in revenue and one that shares our commitment to superior service gives us a greater breadth of services to offer our customers."
"Capital Title is well known and highly regarded for delivering exceptional customer service, which makes the company a perfect fit for LandAmerica," said LandAmerica's President and CEO Theodore L. Chandler, Jr. "With seasoned managers skilled at managing through the cyclicality of the business, Capital Title gives us additional expertise and operating flexibility in the dynamic residential resale market. Together, we are in a better position to anticipate and meet the demands of our collective customers."
Keefe, Bruyette & Woods is acting as exclusive financial advisor to LandAmerica in this transaction. Phoenix, Arizona-based investment banking firm Miller Capital Markets, LLC represents Capital Title in this transaction.
Source: LandAmerica Financial Group, Inc.