First American Plans to Buy First Advantage

First American Corp.'s proposed acquisition of the minority stake outstanding of First Advantage Corp. will simplify the legal and organizational structure of the two companies and aid in the proposed split of the former's financial services and information solutions businesses, according to a report from Fitch Ratings. Santa Ana, Calif.-based FAF, which already controls 74% of the equity in First Advantage, has made an offer to purchase the remaining 26% at $14.04 per share. In late morning trading on June 29, the Poway, Calif.-based provider of risk mitigation and business solutions was trading at $14.85 per share, after going above the $15 mark at one point. It was back in January 2008 that FAF first announced the split, similar to one already accomplished by rival Fidelity National Financial. However in July 2008, it put the split on hold, blaming market conditions. In a statement, Parker S. Kennedy, FAF chairman and chief executive indicated that the company was still committed to the split plan, saying "we believe this transaction will boost the financial strength of First American as we continue to prepare for the separation of our information solutions and financial services businesses." In its report, Fitch said the information solutions business has been a "shock absorber" for FAF during the real estate downturn, but took no ratings actions on the title company. It views the transaction as ratings neutral because it is an all-stock deal.