Santa Ana-based First American Corp. said Tuesday it plans to sell its credit information unit to an affiliate for $550 million.
The sale of the unit to St. Petersburg, Fla.-based First Advantage Corp. is an all-stock deal. When the sale closes, First American will own 80% of First Advantage, up from 69% now.
First Advantage was formed two years ago when First American combined a unit with US Search.com Inc.
The publicly traded company provides employment background checks, substance abuse testing, resident screening, automobile record reporting and investigative services to corporate customers. First American is a title insurer and real estate information provider.
First Advantage said its board has formed a special committee to review the deal. It also hired Morgan Stanley as a financial adviser.
The deal must be approved by First Advantage’s special committee and shareholders. It’s expected to close by the third quarter.
“The company emerging from this acquisition will have a market capitalization of over $1 billion, approximately $600 million in annual revenue,” said John Long, chief executive of First Advantage.
Parker S. Kennedy, First American’s chief executive and chairman of First Advantage, said the companies would continue to work together.
He said the sale would allow First American to focus on its real estate information operations. The deal was a bid to boost “shareholder value,” Kennedy said in a release.
Shares of First American fell 2% to $31.3 Tuesday. First Advantage was up 2% to $19.8.
