First American to Regain Shares at a Premium Price
In a deal in which it will pay more than 30% above market price for its own shares, First American Financial Corp. in Santa Ana said Monday that it expects to pay $29.4 million today to buy back 18% of its stock from a Texas savings and loan’s holding company.
In addition to the cash payment, First American will give American Century Corp. of San Antonio two of its First American Title Insurance Co. subsidiary’s branch offices in California, valued at an additional $4.5 million.
Despite the sizable premium, the repurchase of 997,756 of its shares from American Century was “advantageous” and provided a “unique opportunity” to buy back a big block in one transaction, said Thomas Klemens, vice president and controller of First American.
“The stock was not in the best of hands in a Texas thrift with the way the economy is going there,” Klemens said. State and federal regulators are on a record pace this year in closing or seizing banks and S&Ls; in Texas.
At $29.40 cash per share, plus the equivalent of $4.51 per share for the real estate, First American is paying a total of $33.91 a share, a premium of 30.4% over Monday’s close of $26 per share.
Under state law, the shares First American buys back will be retired, thus increasing the company’s earnings per share for the current fiscal year.
As part of the transaction, First American Title Insurance Co. agreed to lease back the two branch office properties deeded to American Century.
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