Fidelity National to Go Public With Certegy

Fidelity National Financial Inc., the biggest U.S. title insurer, agreed to acquire control of Certegy Inc. and form a publicly traded payment processor valued at $7.6 billion.

Fidelity would merge its processing unit, which compiles and maintains customer data for mortgage lenders, with Certegy to add credit card and check-processing businesses and gain access to publicly traded stock. Fidelity had sought an initial stock sale for its processing arm last year before postponing the offering, citing an “unpredictable” stock market.

“This allows us to go public, but also pick up a breadth in products we didn’t have before,” Fidelity spokesman Daniel Murphy said. “You control your destiny a little more here.”

Fidelity and a group of buyout firms, which own Fidelity National Information Services Inc., would swap each share they hold for a 0.6396 share of Certegy. Certegy would pay its investors, who would own about a third of the combined company, a cash dividend of $3.75 a share before the deal closes. The new entity would take the name of Fidelity National Information.

Shares of St. Petersburg, Fla.-based Certegy jumped $5.20, or 15.5%, to $38.80. Fidelity climbed $3.24, or 8.2%, to $43.

Based on Thursday’s closing price, Certegy investors’ 32.5% stake in the new Fidelity National Information would be worth $2.46 billion. That values the entire entity, which would be based in Jacksonville, Fla., and trade on the Big Board under the symbol FIS, at about $7.6 billion.

Fidelity would own 50.3% of the new company, and a group of investors led by Thomas H. Lee Partners and Texas Pacific Group would hold the remaining shares.

Fidelity Chairman and Chief Executive William Foley would serve as chairman of the new company, and Certegy’s Lee Kennedy would be CEO.

Fidelity National Information would have annual earnings before interest, taxes, depreciation and amortization of about $1 billion on revenue of almost $4 billion, the companies said in a Securities & Exchange Commission filing.

They expect to complete the transaction next quarter.