First American Financial acquires Mother Lode for $300 million

First American previously telegraphed its quest to buy Mother Lode and announced the deal would close this month during an earnings call. During the earnings call, DeGiorgio was asked if the acquisition would mean the company would take on additional debt.

“So as of March, we had $813 million cash of the holding company,” he responded. “So, the Mother Lode acquisition is $300 million. We can obviously fund that without taking on additional debt. And we’ve repurchased about $100 million of stock in April. So really kind of on a pro forma basis we’re about $400 million. It’s a very comfortable place to be. I mean, one thing that we feel good about is we did the debt deal last year, where we raised $650 million at a 2.9% rate. And that’s turning out to be a pretty good deal in hindsight. So effectively what we did is we pre-borrow for the Mother Lode deal. So, we’re just going to fund with cash on hand.”

During the earnings call, he acknowledged a slight dip in purchase revenue: “So organically, excluding acquisitions, we look at our purchase revenue, it’ll be down slightly – 2%, 3%, something like that – based on what we’re seeing today,” he said. “We obviously have this situation where orders are following, but we’re getting a big benefit in the average fee per file. On an organic basis, I think we’re a little bit less than flat. I think once you layer in the acquisitions, we’ll be high single digits in purchase revenue.”

First American is self-described as “a premier provider of title, settlement and risk solutions for real estate transactions.” First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $9.2 billion in 2021, the company offers its products and services directly and through its agents throughout the United States and abroad. The company this year was named among the 100 Best Companies to Work For by both Great Place to Work and Fortune magazine for the seventh consecutive year.