Santa Ana-based First American Corp. offered on Monday to buy the 26% of First Advantage Corp. that it doesn’t already own for about $218 million.
First American, which provides title insurance and business information services, offered to buy First Advantage’s outstanding stock at 10.2% more than what First Advantage’s shares closed at on Friday.
First Advantage shareholders would receive 0.5375 of a First American share for each of their shares under the plan.
The move is an about-face for First American, which spun off Poway-based First Advantage into its own publicly-traded company earlier this decade.
First Advantage provides consumer credit, motor vehicle and employment background checks, among other services.
The buyback “will enhance our financial flexibility, reduce organizational complexity and provide greater overall operational efficiency,” said Parker Kennedy, First American’s chairman and chief executive, in a statement.
The transaction will also boost the financial strength of First American as it prepares for its long-planned separation of its information solutions and financial services businesses, Kennedy said.
First Advantage would remain part of the company’s information solutions division following the separation, while the company’s title business would be spun off. That move, announced more than a year ago, is on hold until the market stabilizes.
At close of trading, First Advantage’s shares were up about 18%, giving it a market value of nearly $900 million.
First American’s stock was down about 2% at end of trading. The company’s valued at about $2.4 billion.
