First American American Completes Acquisition of BASIS100 Inc.
– Acquisition Makes First American Real Estate Solutions the Number-One Supplier of Automated Valuation Models –
September 9, 2004, SANTA ANA, Calif.
The First American Corporation (NYSE: FAF), the nation’s largest data provider, today announced that it has completed its acquisition of Basis100 Inc. (TSX: BAS), a major supplier of automated valuation models (AVMs) to the U.S. mortgage lending industry, for a net cash purchase price of approximately $33 million, plus redemption of approximately $11 million in outstanding Basis100 convertible debentures. The transaction, which closed on Sept. 8, 2004, is immediately accretive to First American’s earnings, and makes First American the nation’s largest provider of AVMs.
“Property valuations are an important component of First American’s multiproduct bundles, and demand for electronic real estate valuations and other data-driven products is increasing,” said Parker S. Kennedy, president and chief executive officer of The First American Corporation. “As we continually improve the speed and accuracy of our automated valuations, we deliver unparalleled value to our customers while leveraging our massive databases to develop information products with more favorable margins.”
Based on current mortgage lender and investor guidelines, an estimated 25 percent of mortgage loans qualify for an AVM in lieu of a standard appraisal. All of the top mortgage lenders have incorporated AVMs into their business systems and processes and, as a result, the AVM market has doubled each year for the last three years. Growth is expected to accelerate as lenders take advantage of investor acceptance of AVMs.
“Basis100 clients can count on receiving the same consistent and reliable performance, while benefiting from the additional value we can deliver by offering them more choices and a world-class technology infrastructure that ensures the highest levels of reliability and support,” said George Livermore, president of First American Real Estate Solutions. “Mortgage analytics are becoming a critical part of our clients’ operations and we are committed to delivering the most advanced solutions in the industry.”
By eliminating the overhead costs associated with duplicate facilities, infrastructure and administrative functions, First American expects to benefit from significant cost synergies during the next six months that will result in pretax earnings of $10 million on an annualized basis.
The First American Corporation is a Fortune 500 company that traces its history to 1889. As the nation’s largest data provider, the company supplies businesses and consumers with information resources in connection with the major economic events of people’s lives, such as getting a job; renting an apartment; buying a car, house, boat or airplane; securing a mortgage; opening or buying a business; and planning for retirement. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within six primary business segments, including: Title Insurance and Services, Specialty Insurance, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $6.21 billion in 2003, First American has 29,000 employees in approximately 1,800 offices throughout the
First American Real Estate Solutions (RES), a member of the First American Family of Companies, is the nation’s largest provider of advanced property and ownership information, analytics and services. RES’ database covers more than 2,000 counties representing 95 percent of the nation’s real estate transactions. With more than 500,000 users nationwide, RES products are used by companies to improve customer acquisition and retention, detect and prevent fraud, improve mortgage transaction cycle time and cost efficiency, measure the value of residential and commercial properties, identify real estate trends and neighborhood characteristics, track market performance and increase market share. More information about First American RES can be found on the Internet at www.firstamres.com.
Certain statements made in this press release, including those related to growth in the AVM market, product offerings and cost synergies, are forward looking. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: interest rate fluctuations; changes in the performance of the real estate markets; access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company’s significant customers and competitors; the company’s continued ability to identify businesses to be acquired; changes in the company’s ability to integrate businesses which it acquires; and other factors described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2003, as filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.