Fidelity National Says It May Make Offer : Irvine Firm Considers Bid on Hammond Co.
Four months after buying a large chunk of the Hammond Co., a Newport Beach mortgage banking firm, Fidelity National Financial Inc. said Friday that it will consider launching a tender offer for the company.
The Irvine title company, which recently increased its stake in Hammond to 23.6%, said in a Securities and Exchange Commission filing that it is seeking ways to maximize shareholder value.
Officers at both public companies could not be reached for comment Friday.
In May, after Fidelity spent more than $1.5 million to acquire its initial 16.3% stake in Hammond, a Fidelity executive said his firm would consider buying more stock but did not intend to turn its purchases into a takeover attempt or a “hostile situation.”
But in the SEC filing, the Irvine firm said it is reviewing Hammond’s policies and business practices and plans to submit its own business strategies to Hammond’s board. The firm also said it may buy more stock or even launch a tender offer for the rest of the mortgage banking firm.
In the last month, Fidelity spent $162,443 to buy 38,222 shares in six transactions ranging from $4 a share to $4.25 a share, the SEC filing states.
Independent mortgage banking operations generally are good buys because their stock has been undervalued, said Lawrence Butler, a senior vice president at Newport Securities Corp. brokerage in Costa Mesa.
Hammond, a regional firm, also would make a particularly good fit for Fidelity, another regional firm, because the title insurer could feed off the real estate loans Hammond makes to sell its title policies, Butler said. “Hammond is a good-size company, has been in Orange County a long time and has had a very good name, a very respected name, in the community for some time,” Butler said.
The mortgage banker lost $1.1 million in its fiscal year that ended March 31 and $513,000 in its fiscal first quarter that ended June 30. The firm attributed the losses to reduced sales of loan servicing rights, fewer new loans, lower interest income and a $450,000 write-off related to its failed bid to buy Mission Savings & Loan in Riverside.
