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Stewart in back and forth with Fidelity National before finally reaching deal

Stewart Information Services Corp. agreed to be acquired by Fidelity National Financial Inc. in a $1.2 billion cash-and-stock deal. Under the deal, Stewart will be bought for $50.00 per common share, which can go down to $45.50 per common share if the combined company is required to divest assets or businesses to receive required regulatory approvals. The two companies negotiated the terms of the deal for months before finally reaching an agreement.

Stewart's plans to be acquired began in the run up to its third-quarter earnings release on Nov. 6, 2017. The company's earnings were expected to fall materially short of consensus analyst estimates. It decided to form a committee to consider strategic alternatives, including a potential sale of the company, potential business combinations or continued execution of its stand-alone business plan.

Initially, Stewart was engaged in talks with three companies, including Fidelity National. In one of the potential transactions, Stewart discussed acquiring a company, which entailed some of the members of its executive team to be replaced by that company's executive team. Following the company's announcement of a strategic alternatives committee, several other companies expressed interest in Stewart but many of them eventually backed out.

Stewart continued negotiations with Fidelity National about the terms of their potential deal, particularly in connection with regulatory risks and a reverse termination fee should the transaction be rejected by regulatory authorities.

A company identified as Party C in the filing came the closest to Fidelity National's offer to acquire Stewart. That company offered $39.00 per share to $40.00 per share in the beginning, later increasing it to $42.00 per share to $44.00 per share before settling at $40.00 per share to $42.00 per share. It refused to further increase the price and also declined Stewart's proposal for a transaction involving warrants, eventually bowing out of the process.

At one point during the discussions, Stewart mulled whether to continue operating as a stand-alone entity but it concluded that a deal with Fidelity National was the opportunity that offered the maximum value for its shareholders.

The two parties ironed out their merger agreement before finally announcing it March 19.