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Jax Daily Record Thursday, Jun. 19, 201412:00 PM EST

Fidelity shareholders approve tracking stock plan

by: Mark Basch Contributing Writer

Fidelity National Financial Inc. on Wednesday received shareholder approval for its tracking stock plan, clearing the way to divide the company’s common stock into two parts in about two weeks.

Jacksonville-based Fidelity will remain a single company but on Wall Street, there will be two stocks representing its businesses.

One stock, called the FNF Group, will consist of the company’s core title insurance business and its Black Knight Holdings Inc. businesses, which include mortgage processing and analytics services.

The Black Knight businesses are made up largely of the operations of Lender Processing Services Inc., the Jacksonville-based company that was once spun off from Fidelity but reacquired in January this year.

The second stock, called the FNFV Group, will consist of Fidelity’s investments in other businesses, including several restaurant chains and auto parts company Remy International Inc.

Each current Fidelity share will be converted into one share of FNF Group and one-third of a share of FNFV Group. The company plans to distribute the new shares on June 30, with trading scheduled to begin on July 1.

When Fidelity issues its quarterly earnings reports, it will now be doing it in three parts: one for the company as a whole, one for the FNF Group businesses and one for the FNFV Group operations. Also, since it doesn’t own 100 percent of most of the businesses that fall into FNFV, it will report separately on each company in the FNFV portfolio.

It sounds overly complicated, but Fidelity President Brent Bickett doesn’t see it that way.

“Actually, it’s more simple. It simplifies our story,” Bickett said in an interview after the annual shareholders meeting at Fidelity’s headquarters complex on Riverside Avenue.

“This is actually a lot better,” he said.

He said the new system increases the “transparency and clarity” of Fidelity’s businesses.

The four proposals brought before shareholders to implement the tracking stock plan were each only approved by between 56 percent and 58 percent of shares outstanding, and two proxy advisory firms had recommended that stockholders reject the plan.

However, Bickett said investors he talked and explained the plan to were in favor of it, because of the clarity of separating the businesses.

“Investors wanted that pure play” of the title insurance and mortgage-related businesses in one stock, and the opportunity to own stock in Fidelity’s investment portfolio, he said. The company has a long history of making successful investments in companies outside of its core title insurance business.

“We have a great track record of building businesses,” Bickett said.

During the shareholders meeting, Bickett touted the strength of the company’s core FNF Group businesses. Fidelity is the largest title insurance company in the country and provides processing services for more than 50 percent of all U.S. first mortgage loans.

“If you look at our core products, there’s no one competitor who can stack up to what Fidelity has,” he said.

The company’s stock has performed well recently as a single entity. From 2011 to 2013, Fidelity’s stock rose 136 percent, compared with 49 percent for the Standard & Poor’s 500 index, Bickett said.

“So, a very, very nice return for our shareholders,” he said.

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