The First American Corporation to Acquire
Credit Management Solutions, Inc.
- Nation's Largest Automotive Credit Service Provider to Accelerate First
American's Consumer Information Growth Strategy -
SANTA ANA, Calif., Jan. 30 The First American Corporation
, the nation's leading provider of business information and related
products and services, and Credit Management Solutions, Inc. ("CMSI")
, a premier technology provider of credit automation software
and services, jointly announced today that First American has entered into a
definitive agreement 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 United States and
Canada, including AmeriCredit, Bank of America, Bank One, General Motors
Acceptance Corp., 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."
Parker S. Kennedy, president of The First American Corporation, added:
"The acquisition of CMSI represents another major advancement in our strategy
to expand our consumer information segment. In addition to providing
extensive automated credit analysis services to the automobile-lending
industry, CMSI serves telecommunications companies, student lenders, equipment
lessors and small businesses. 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."
CMSI's president and chief executive officer Scott L. Freiman said: "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. 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 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 approximately 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.
The First American Corporation, based in Santa Ana, Calif., is the
nation's leading provider of business information and related products and
services. The corporation's three primary business segments include: title
insurance and services; real estate information and services, which includes
mortgage information services and database information and services; and
consumer information and services, which provides automotive, sub-prime and
direct-to-consumer credit reporting; resident screening; pre-employment
screening; property and automotive insurance tracking services; property and
casualty insurance; home warranties; investment advisory; and trust and
banking services. Information about the company and an archive of its press
releases can be found on the Internet at http://www.firstam.com.
Since it was founded in 1987, CMSI has been a premier 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 (http://www.creditconnection.com),
which links credit originators such as automobile dealers and borrowers with
an extensive network of leading 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 that have
been the choice of the world's largest and most demanding lending
institutions. Additional information on CMSI, is available at http://www.cmsinc.com.
CreditConnection is a registered trademark of Credit Management Solutions,
Inc.
Certain statements made in this press release, including those relating to
the timing of the transaction and the expected benefits of the merger,
including the contribution of CMSI to First American's credit reporting
business and the contribution of CMSI to First American's earnings, are
forward-looking. Risks and uncertainties exist which may cause results to
differ materially from those set forth in these forward-looking statements.
Factors that could cause the anticipated results to differ from those
described in the forward-looking statements include: the possibility that the
anticipated benefits from the merger cannot be fully realized; the possibility
that costs or difficulties related to the integration of CMSI's business with
that of First American will be greater than expected; each company's ability
to compete in highly competitive and rapidly changing marketplaces; interest
rate fluctuations; changes in the performance of the real estate markets;
general volatility in the capital markets; changes in applicable government
regulations; consolidation among the companies' significant customers and
competitors; legal proceedings commenced by the California attorney general
and related litigation; the company's continued ability to identify businesses
to be acquired; changes in the company's ability to integrate businesses which
it acquires; and other factors described in the companies' periodic reports
filed with the Securities and Exchange Commission, including, but not limited
to, their respective Annual Reports on Form 10-K for the year ended Dec. 31,
1999. The forward-looking statements speak only as of the date they are made.
The companies do not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking
statements are made.
Additional Information
First American plans to file a Registration Statement on SEC Form S-4 in
connection with the merger and CMSI expects to mail a Proxy
Statement/Prospectus to its stockholders containing information about the
merger. Investors and security holders are urged to read the Registration
Statement and the Proxy Statement/Prospectus carefully when they are
available. The Registration Statement and the Proxy Statement/Prospectus will
contain important information about First American, CMSI, the merger and
related matters. Investors and security holders will be able to obtain free
copies of these documents through the Web site maintained by the U.S.
Securities and Exchange Commission at http://www.sec.gov. In addition to the
Registration Statement and the Proxy Statement/Prospectus, First American and
CMSI file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and
copy any reports, statements and other information filed by First American and
CMSI at the SEC public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at the SEC's other public reference rooms in New York, New York
and Chicago, Illinois. Please call the SEC at 800-SEC-0330 for further
information on public reference rooms. First American and CMSI's filings with
the SEC are also available to the public from commercial document-retrieval
services and the Web site maintained by the SEC at http://www.sec.gov. CMSI,
its directors, executive officers and certain members of management and
employees may be soliciting proxies from CMSI stockholders in favor of the
adoption of the merger agreement. A description of any interests that CMSI's
directors and executive officers have in the merger will be available in the
Proxy Statement/Prospectus.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990929/FAFLOGO )
