First American Integrates Transamerica Tax and Flood
In a move underlining its initiative to offer bundled services to the mortgage industry, First American Corp. announced completion of its acquisition of Transamerica's real estate tax service and flood hazard certification businesses.
The deal was completed at a net cash purchase price of $375 million, with no debt assumed in the transaction.
"The Transamerica system has some components that the First American System does not," First American president Parker Kennedy told National Mortgage News. "In combining the systems, we'll take the best of both.
"Overall, it's a great purchase for our shareholders and customers. We have a number of bundling initiatives proceeding currently to deliver better products, and this acquisition fits very well into that category."
According to the announcement, the deal will be immediately accretive to First American earnings, producing cost synergies that will result in additional pretax profit in excess of $50 million on an annualized basis as integration is completed over the next 18 months.
In addition to being accretive to First American's income next year, First American said it will receive a tax benefit of $186 million over 15 years as a result of the deal.
Mr. Kennedy said that First American is already the nation's largest provider of real estate tax services and flood zone determinations. He said Transamerica is the second largest provider of those services.
The transaction offers the opportunity to achieve operating savings as a result of "overlapping infrastructure," he said during a conference call to discuss the acquisition. First American officials declined to specify where consolidation may occur, but noted that both First American and Transamerica have tax services headquarters in the Dallas area.
"The added scale of these operations will allow us to better serve the mortgage lending community and provide the mortgage industry's most comprehensive and accurate bundle of information products and services," Mr. Kennedy said.
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