First American announces spinoff, increased share repurchase authorization

By Lisa Kerner

Charlotte, N.C., Jan. 15 - First American Corp. plans to spin off its title insurance and specialty insurance businesses into a separate public company called First American Financial Corp.

Dennis J. Gilmore, First American's current chief operating officer, will lead the financial services company as chief executive officer.

First American's property information and mortgage information segments, along with First American's 75% interest in First Advantage Corp., will stay with the existing holding company, which will be renamed and led by Frank V. McMahon, current vice chairman and chief financial officer of First American.

First American Financial is expected to trade on the New York Stock Exchange under First American's current ticker symbol, "FAF."

First American Financial expects to pay the same total dividend currently paid by First American, a company news release stated. After the spinoff, First American is not expected to pay a dividend.

"We believe that this transaction will unlock the unrealized value of our information businesses, while strengthening the competitive positions of both companies," First American chairman and CEO Parker S. Kennedy said in the release.

"After the separation, each company will have the financial strength and flexibility to implement its own unique growth strategies, allowing both organizations to refine and refocus their business mix," Kennedy added.

Kennedy will become executive chairman of both companies.

The board of directors of First American has authorized the repurchase of $300 million of the company's common shares in addition to the $60 million remaining on the $500 million previously authorized.

It was also announced that First American received a financing commitment from Wells Fargo for a $200 million interim credit facility.

First American, a Santa Ana, Calif., business information company, was advised by Lehman Brothers Inc.

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