Alltel Fetches $1 Billion
Fidelity National Financial here, which has been on an acquisition binge, struck again last month - this time, agreeing to buy the financial services division of technology giant, Alltel, Little Rock, Ark., in a billion dollar deal.
Sources told Mortgage Servicing News that Alltel was asking upwards of $1.7 billion for the Jacksonville, Fla.-based unit, but agreed to take just $1.05 billion in cash and stock.
Moreover, a source familiar with the matter said Fannie Mae and a "partner" were interested bidders at one point. Fiserv, a competing technology firm, also had expressed interest in the division.
One advisor noted that a few years back Fannie Mae was close to buying Alltel's mortgage technology business (servicing being the biggest component), but "backed out at the 23rd hour."
FNF is a publicly traded third-party vendor that provides title insurance and other real estate-related services to residential lenders. A few weeks back it bought Lender's Service Inc., a closing services firm based in Pittsburgh. Last year it acquired Eastern Software, a loan origination system provider.
Alltel operates the largest residential loan "service bureau" in the U.S., but that business faces challenges as some large servicers, notably Washington Mutual, move to install in-house based systems.
The nation's three largest servicers of residential loans, WaMu, Wells Fargo Home Mortgage and Chase Home Finance all currently use Alltel. Together the three mortgage bankers service almost 30% of all outstanding mortgages in the U.S. (WaMu hopes to convert off Alltel's system by year-end.)
Jeff Lebowitz, who runs the annual MorTech study, called the acquisition "not bad," but said it was "a little long on price." He added that FNF "probably got concessions because of the loss of WaMu."
As for Alltel's servicing technology, he said, "It's big and old, but it doesn't break very often."
Alltel officials declined to comment on the deal at press time.
FNF's interest in Alltel was first reported in early January by National Mortgage News, a sister publication of this newspaper.
Alltel says its servicing bureau processes 46% of all outstanding residential loans in the U.S. The company notes that it has "processing relationships" with 17 of the top 25 mortgage funders.
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