First American Enters Into Definitive Agreement To Acquire Basis100 Inc.
–Acquisition Will Make First American Real Estate Solutions the Number One Supplier of Automated Valuation Models –
June 30, 2004, SANTA ANA, Calif.
The First American Corporation (NYSE: FAF), the nation’s largest data provider, today announced that it has signed a definitive agreement to acquire Basis100 Inc. (TSX: BAS), a major supplier of automated valuation models (AVM) to the U.S. mortgage lending industry. The transaction, which is subject to approval by Basis100’s shareholders and debenture holders, is expected to close in the third quarter of 2004.
“Demand for real estate valuations and other data-driven products is increasing as our customers strive to improve service and drive cost out of their processes,” said Parker S. Kennedy, president and chief executive officer of The First American Corporation. “The addition of Basis100 and its products to our existing line will make First American the nation’s number one provider of automated valuation solutions.”
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.
The transaction will be immediately accretive to First American earnings. First American will acquire 100 percent of the equity of Basis100 through a cash payment of approximately $33 million to current holders of Basis100 common stock, warrants and options. Assuming the satisfaction of certain conditions, each Basis100 shareholder will receive approximately CDN$1.00 for every share acquired by First American. Additionally, First American will redeem outstanding Basis100 convertible debentures for a cash payment of approximately $11 million. By eliminating the overhead costs associated with duplicate facilities, infrastructure and administrative functions, First American expects to benefit from significant cost synergies over the next six months that will result in total pretax earnings of $10 million on an annualized basis.
“We have great respect and appreciation for the products, talented people and unique data we will add to our business through this transaction,” said George Livermore, president of First American Real Estate Solutions (RES). “We plan to maintain the products so that 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.”
As the largest data provider in America, First American gathers both proprietary and publicly accessible data and forms it into useful, decision-ready information products and services for a wide variety of industries and consumers. From title, mortgage and property information to credit and background screening information, First American provides data resources to support the major economic events in people’s lives.
“This is a win-win for both our shareholders and clients,” said Michael Johnston, president and chief executive officer of Basis100. “First American RES has a proven track record of success in the development and delivery of automated valuation models, and they are well-equipped to support the growing demand for a range of analytical products for the mortgage lending industry.”
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 United States and abroad. More information about the company and an archive of its press releases can be found at www.firstam.com.
First American 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 the closing of the transaction, market position, growth in the AVM market 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.