The First American Corporation, a provider of business information and related products and services, and Credit Management Solutions Inc. (CMSI), a technology provider of credit automation software and services, jointly announced on Jan. 30 that First American has agreed to acquire CMSI.
First American will pay approximately $52 million, adjusted for trading-value changes in accordance with specified collar provisions, in a stock-for-stock transaction expected to close in the second quarter of 2001. The acquired entity will be known as First American CMSI.
The acquisition of CMSI is intended to enhance First American's presence in the automotive and consumer lending credit reporting arenas, where it already holds a significant market share. The addition of CMSI's suite of credit decisioning products, along with its CreditOnline(TM) transaction processing network, will give First American and its subsidiaries access to millions of lending transactions generated by CMSI clients. These clients include some of the largest financial institutions in the U.S. and Canada, including AmeriCredit, Bank of America, Bank One, General Motors Acceptance Corporation (GMAC), Royal Bank of Canada, Wells Fargo Bank and WFS Financial.
"For over a decade, CMSI has been the credit automation choice of some of the nation's most prestigious lenders," said Donald A. Robert, president of First American's Consumer Information and Services Group. "Additionally, CMSI's CreditOnline network has been nearly doubling its transaction volume each year since 1998 and now processes more than a quarter of a million credit transactions each month for auto dealers and lenders. Each of these credit transactions represents an opportunity for a First American product to be sold, whether it be merged credit reports, subprime credit data or automobile insurance tracking services."
"The acquisition of CMSI represents another major advancement in our strategy to expand our consumer information segment," said Parker S. Kennedy, president of The First American Corporation. "CMSI's relationships with lenders across the nation also gives us the opportunity to cross market other First American products and services to a broad new customer base."
"The combination of CMSI and First American decisively accelerates everything we have accomplished as a stand-alone company and creates an exciting new and expanded platform for future growth that we expect will reward CMSI employees and stockholders," said Scott L. Freiman, president and CEO of CMSI. "Our rapidly expanding automotive network, our new credit-decisioning products, our experienced employees and our improved financial performance will greatly benefit First American's consumer strategy."
Under the terms of the definitive merger agreement unanimously approved by the boards of directors of both companies, CMSI stockholders will receive registered common shares of First American in exchange for their shares of CMSI. The value attributed to the First American common shares to be paid in the transaction will vary depending on the closing prices of First American's shares prior to the CMSI stockholders meeting, subject to the specified maximum and minimum prices. CMSI stockholders will receive no more than 0.2841 and no less than 0.2083 First American common shares for each share of CMSI common stock.
The merger is subject to the approval of CMSI stockholders, receipt of regulatory approvals and satisfaction of customary closing conditions. Certain stockholders of CMSI, representing about 49 percent of CMSI's outstanding common stock, have entered into voting agreements in support of the merger.
The transaction is expected to be accretive to First American's earnings in 2002. First American also expects to retain substantially all of CMSI's 200 employees and the company's existing facilities, which are headquartered in Annapolis Junction, Md.
About The First American Corporation
The First American Corporation, based in Santa Ana, Calif., is a provider of business information and services.
Information about the company and an archive of its press releases can be found at www.firstam.com.
About CMSI
Since it was founded in 1987, CMSI has been a provider of credit automation software and services, including online lending and leasing technology. The company's e-commerce subsidiary, Credit Online, Inc., credit-enables business-to-business transactions through its Internet gateway and its patented CreditConnection(R) technology (www.creditconnection.com), which links credit originators such as automobile dealers and borrowers with a network of prime and non-prime lenders.
Through its CMSI Systems, Inc. subsidiary, CMSI licenses credit decisioning and other automation systems and services for consumer and business credit.
Additional information on CMSI is available at www.cmsinc.com.
