Fidelity Acquires Matrix in Effort to Diversify

Fidelity National Financial Inc., the nation’s fourth-largest title insurer, said Wednesday that a Denver mortgage banking company has agreed to merge with a newly formed Fidelity subsidiary in a stock swap valued at about $187 million.

The acquisition of Matrix Capital Corp. is part of Fidelity’s ongoing plan to diversify its real estate-related operation and offset the often volatile title business.

In particular, the deal would greatly expand Fidelity’s specialty finance business, which it began last year with the acquisition of an equipment leasing firm.

Matrix is a diversified company with businesses ranging from mortgage banking and loan origination to real estate management. It also owns a small bank in Denver that will provide low-cost funding for Fidelity’s equipment leasing operation, said Frank P. Willey, Fidelity’s president.

However, Matrix focuses on mortgage merchant banking by purchasing and selling residential mortgage loans and servicing rights and by offering brokerage, consulting and other services to financial companies and institutions.

Matrix earned $8.1 million last year. Fidelity’s profit was $40 million on revenue of $747 million.

Under the deal, Matrix stockholders would receive 0.8 shares of Fidelity for each share of Matrix they own, subject to certain pricing features. Fidelity’s stock closed at $34.81 a share, down 13 cents in New York Stock Exchange trading. Matrix gained $1.50 to close at $20.75.

The merger is subject to the approval of regulators and Matrix stockholders.