First American Completes Acquisition of Basis100 Inc.
September 9, 2004
Acquisition Makes First American Real Estate Solutions the Number-One Supplier of Automated Valuation Models
SANTA ANA, Calif., /PRNewswire-FirstCall/ -- The First American Corporation (NYSE: FAF) has completed its acquisition of Basis100 Inc. (TSX: BAS), a major supplier of automated valuation models (AVMs) to the U.S. mortgage lending industry, for a net cash purchase price of approximately $33 million, plus redemption of approximately $11 million in outstanding Basis100 convertible debentures. The transaction, which closed on Sept. 8, 2004, is immediately accretive to First American's earnings, and makes First American the nation's largest provider of AVMs.
"Property valuations are an important component of First American's multiproduct bundles, and demand for electronic real estate valuations and other data-driven products is increasing," said Parker S. Kennedy, president and chief executive officer of The First American Corporation. "As we continually improve the speed and accuracy of our automated valuations, we deliver unparalleled value to our customers while leveraging our massive databases to develop information products with more favorable margins."
Based on current mortgage lender and investor guidelines, an estimated 25 percent of mortgage loans qualify for an AVM in lieu of a standard appraisal. All of the top mortgage lenders have incorporated AVMs into their business systems and processes and, as a result, the AVM market has doubled each year for the last three years. Growth is expected to accelerate as lenders take advantage of investor acceptance of AVMs.
"Basis100 clients can count on receiving the same consistent and reliable performance, while benefiting from the additional value we can deliver by offering them more choices and a world-class technology infrastructure that ensures the highest levels of reliability and support," said George Livermore, president of First American Real Estate Solutions. "Mortgage analytics are becoming a critical part of our clients' operations and we are committed to delivering the most advanced solutions in the industry."
By eliminating the overhead costs associated with duplicate facilities, infrastructure and administrative functions, First American expects to benefit from significant cost synergies during the next six months that will result in pretax earnings of $10 million on an annualized basis.
Source: The First American Corporation