First Advantage Acquires Unit from Affiliate First American

Two closely related companies, First Advantage Corp. and First American Corp., have reached a definitive agreement whereby First Advantage, a risk mitigation and business solutions provider, will purchase the Credit Information Group of First American.

First American and First Advantage originally announced a letter of intent for the transaction on March 22. The definitive agreements have been approved by the board of directors at both First American and First Advantage, including by a committee of the independent directors of First Advantage.

Morgan Stanley & Co. served as the financial advisor to the committee of independent directors and delivered a fairness opinion to the independent committee. Lehman Brothers served as financial advisor backing the fairness of the transaction to First American's directors.

Parker Kennedy, chairman and CEO of First American and chairman of First Advantage, said in the press release that his company is "firmly committed to maximizing value for shareholders of both First American and First Advantage.

"Between our two companies, nearly all forms of business information are available. First American will concentrate on real estate information and First Advantage will cover the other forms of business information. This is a great move for both companies as credit information is a natural fit with the other background screening services offered by First Advantage. First American customers will continue to benefit from a close partnership between our companies, and First Advantage will gain scale and product strength to continue its dynamic growth."

He said the transfer of First American's credit information unit to First Advantage creates natural synergies. After the transaction, First Advantage will have in excess of a $1 billion market cap based on share values in late May.

Under terms of the agreement, First American Corp. and its First American Real Estate Solutions joint venture will contribute their mortgage, automotive, consumer and subprime credit businesses to First Advantage in exchange for 27,804 shares of First Advantage class B common stock, valued at $570 million, based upon the agreed upon stock price of $20.50 per share. First Advantage will also issue 975,610 class B shares to First American in a $20 million debt-to-equity conversion. An additional 1,268,292 shares of First Advantage class B common stock (valued at $26 million) may be issued to First American in connection with a prospective CIG acquisition.

Expected to close in the third quarter of 2005, the transaction is subject to majority approval by First Advantage's disinterest class A shareholders and other customer closing conditions, the companies said.

When completed, First American's ownership stake in First Advantage will climb from its current position of 67% to about 80%.

The unit that is being acquired by First Advantage, First American's Credit Information Group, reported pretax operating earnings of $18.9 million for the three months ended March 31.

Separately, First Advantage said that it has accelerated the consolidation of its existing facilities into its new corporate headquarters in St. Petersburg and has closed an office in Milwaukee.

First Advantage is a provider of risk mitigation and business process solutions. The company said it has a leading position as a provider of employment background screening, drug-free workplace programs and other occupational health testing, corporate tax consulting services, resident screening, motor vehicle records, transportation credit reporting, investigative services, supply-chain security consulting and consumer location services. First Advantage ranks among the top three companies in all of its major business lines. The company has nearly 2,300 employees in offices throughout the United States and abroad.

The First American Corp. is a Fortune 500 company.

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