Fidelity National’s Hostile Takeover of US Facilities Turns Friendly : Insurance: Rival company decides against proposing a slate of director nominees.

The yearlong hostile bid to take over US Facilities Corp. has turned friendly--an indication that all or part of the insurance carrier could be sold soon to onetime nemesis Fidelity National Financial Inc.

“We have recently had positive discussions between our two companies,” said William P. Foley II, Fidelity’s chairman.

Officials from US Facilities in Costa Mesa, which specializes in medical, property and casualty insurance, would not comment.

As recently as May 8, Fidelity President Frank P. Willey said the Irvine title insurer would continue to pursue its hostile $73-million takeover bid.

Willey had said that Fidelity, the nation’s fifth-largest title insurer, would propose its own slate of director nominees at the US Facilities annual meeting, which was held Wednesday. But, in an apparent show of improved relations between the two companies, no alternative slate was nominated.

Shareholders elected Charles L. Schultz, 67, former chief financial officer of Farmers Group Inc., as a new member of the company’s board of directors. They also reelected as directors David L. Cargile, 49, the company’s president and chief executive, and Howard S. Singer, 49, its executive vice president. All will serve three-year terms.

Cargile, who also is chairman, took over earlier this year after the unexpected resignation of George Kadonada, the company’s longtime chairman and chief executive. Kadonada had been a fierce opponent of the Fidelity takeover.

At last year’s annual meeting, shareholders overwhelmingly approved Fidelity’s motion to put the company up for sale to the highest bidder. Fidelity had offered $15 a share at the time, and no other company seemed interested.

Shareholders also appeared to elect Fidelity’s two nominees to the board by a narrow margin after a number of votes were invalidated, but Kadonada sued and won an order reinstating the votes and putting management’s slate back in office.

Fidelity, like many real estate-related financial companies, has seen its earnings rise and fall with the fluctuating mortgage market. Foley has said that he wants to diversify the company by acquiring such operations as US Facilities to help Fidelity survive bad times.

Fidelity, for instance, felt the impact of higher interest rates and reported a $3.3-million loss for the first quarter. US Facilities recorded a quarterly profit of $2.9 million.