IRS to allow Fidelity National tax-free Black Knight spin-off

The Internal Revenue Service will allow Fidelity National Financial Inc. to distribute its entire stake in Black Knight Financial Services in a tax-free transaction.

The BKFS stock will be given to the shareholders of FNF Group, a tracking stock for Fidelity National Financial's title insurance business.

The ruling also allows Fidelity National to proceed with exchanging the shares of the tracking stock for its investment portfolio, FNFV Group, for those of a newly created stand-alone company, Cannae Holdings.

"We are continuing to focus on completing the necessary filings, shareholder votes and other closing conditions for both transactions," said Fidelity National Chairman and BKFS Executive Chairman William Foley in a press release.

"At closing, we will have a streamlined, industry-leading title insurance company in FNF, a stand-alone, more liquid Black Knight and an independent Cannae Holdings. We believe this structure will benefit the shareholders of all three separate public companies," Foley said.

Separately, Thomas H. Lee Partners filed for a secondary public offering on May 9 to sell 5 million shares of BKFS.

If consummated, the move will bring Thomas H. Lee's holdings down from 56% of the publicly traded class A stock to 49%. Its total ownership of both classes of BKFS common stock will be reduced to 23% from 26%.