Fidelity National Information Services (FIS) says its board of directors has approved the spin off of its lender processing services (LPS) division into a separate publicly traded company.
Under the deal, assets of LPS will go to form a new unit, Newco, in exchange for 100% of Newco's common stock and about $1.6 billion of its debt.
Following the exchange and SEC approvals and an IRS ruling for a tax-free spinoff, Fidelity will distribute 100% of Newco common stock to its shareholders.
"We believe the proposed separation will provide more company flexibility and dedicated management focus with respect to product development, capital investment and strategic initiatives, which should ultimately drive higher value to our customers and shareholders," says William Foley, executive chairman, Fidelity National, in a statement.
LPS, which has generated $1.7 billion in revenue over the last 12 months, provides mortgage lenders with origination, automated title and settlement, processing, default, valuation, risk management, tax, flood and collateral protection services.
Completion of the planned spin-off is expected to occur in mid-2008.