Recent LandAmerica Deals Designed to Boost Bundling Potential

LandAmerica Financial Group Inc. here, preparing for the new face of the mortgage banking industry, has made separate deals to acquire INFO1 Holding Co. Inc., an Atlanta-based mortgage credit report provider, and Lereta Corp., a national tax service and flood hazard certification provider, headquartered in Covina, Calif.

In a teleconference to discuss the transactions, LandAmerica executives said part of the motivation for the deals was the ability to offer bundling of loan origination services.

The chairman and chief executive of LandAmerica, Charles Foster, said there has been "increased discussions about bundling," which is considered to be one of the cornerstones of the proposed Real Estate Settlement and Procedures Act regulation currently on the table.

Until now, while LandAmerica has made these services available to its clients, it was getting them through other vendors.

This deal, he said, "provides us some flexibility in regard to pricing and packaging bundles."

Chief operating officer Theodore Chandler said the company sees these transactions in three pieces. These two companies can help LandAmerica make money. Secondly, it gives access to originators that are not currently LandAmerica customers as well as providing cross-selling opportunities.

Finally, it leaves LandAmerica "well positioned" no matter how bundling turns out, whether it is mandated by the Department of Housing and Urban Development or driven in the marketplace by large lenders, he said.

Besides bundling, Mr. Foster said, another motivating factor for LandAmerica was the opportunity to diversify its earnings stream.

Right now, 95% of its revenue comes from activities related to the title insurance business. Within five years, he said, the company has a goal of generating 20% to 25% of its revenue from products and services other than title insurance.

The INFO1 deal has already closed. LandAmerica paid $47 million in cash to acquire the company, which had revenue of $30.9 million in the first six months of this year.

Under the agreement to acquire Lereta, LandAmerica will pay $210 million in cash. Lereta had gross revenue of $85 million for the six months ended June 30, 2003.

The Lereta transaction is subject to regulatory approval and is expected to close in late September.

A significant portion of the cash being used to pay for the transaction will come from cash from operations, while the rest will be drawn from LandAmerica's credit lines.

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