Fremont to Buy PacificAmerica

Fremont General Corp., the seventh-largest U.S. workers’ compensation insurer, said it will pay $55 million for PacificAmerica Money Center Inc. in a deal that would expand its home-loan business.

Santa Monica-based Fremont would pay 75% of the purchase price in cash and the rest in its own stock. The transaction values Woodland Hills-based PacificAmerica at $10 a share, more than double its closing price Thursday.

PacificAmerica advanced $2.38 to close at $7.25 Friday on heavy Nasdaq volume. Fremont shares rose $1.25 to $40, also in heavy trading, on the New York Stock Exchange.

The purchase would give Fremont a company that made $768 million in single-family home mortgages last year through offices in 45 states.

Acquiring PacificAmerica will more than double Fremont’s home-loan business, and make it national rather than California-focused, said Wayne Bailey, Fremont’s chief financial officer. The combination, expected to be completed by the end of the first quarter will “increase our profit margin and add to our bottom line,” he said.

Fremont’s per-share earnings could grow 15 cents to 20 cents next year because of the purchase, the company said. Fremont had been expected to earn $4.27 a share next year, according to an IBES International Inc. survey.

Last year, Fremont collected $794.6 million of net premiums from workers’ compensation insurance.