U.S. Facilities Shareholders Vote to Sell Insurer to High Bidder

Shareholders of U.S. Facilities Corp. voted to sell the insurance holding company to the highest bidder, and they narrowly elected two directors nominated by the company’s hostile pursuer, according to results released Thursday.

Nearly 59% of the shares voted at Wednesday’s annual meeting were cast in favor of the sale proposal sponsored by Fidelity National Financial Inc. in Irvine.

The victory for Fidelity, the nation’s fifth-largest title insurer, should lead to negotiations soon on its hostile $79-million offer for Costa Mesa-based U.S. Facilities.

With no other bidders in sight, Fidelity hopes to have the highest offer at $15 a share, though the price will depend on a detailed review of U.S. Facilities’ financial condition.

William P. Foley II, Fidelity’s chairman, has said he wants U.S. Facilities to help steady earnings at his real-estate-related business, where income fluctuates with the market. Fidelity’s aim is to diversify so it can level out its operational peaks and valleys.

U.S. Facilities already has a committee of outside directors and an investment banker reviewing its options, but it had not given them authority to negotiate a sale. That authority is now expected to be given.

Wall Street responded favorably to the vote. The price of U.S. Facilities stock rose 56.25 cents to close at $14.125 a share Thursday on Nasdaq. Fidelity’s stock, which has dropped a few dollars a share over the past month, closed at $16.625 a share, up 12.5 cents, on the New York Stock Exchange.

However, U.S. Facilities Chairman George Kadonada said the company may challenge the election of Fidelity’s director-nominees, Newport Beach lawyer Andrew F. Puzder and Wall Street money manager Seymour Preston Jr.

Fidelity’s candidates edged management’s slate by just 0.5% of the shares cast after independent vote tabulators threw out 80,386 shares that appeared to be for U.S. Facilities’ slate.

Reading a prepared statement, a tense Kadonada said U.S. Facilities will investigate why the shares that could have provided the winning margin for the company were thrown out.