Fitch Ratings has placed LandAmerica Financial Group and its insurance subsidiaries on “Rating Watch Negative” following LFG's recently announced plan to acquire Capital Title Group Inc. for $251 million.
The Negative Rating Watch, Fitch said, reflects ongoing concerns about LFG's ability to profitably execute its acquisition strategy.
Chicago-based Fitch said it is concerned about the size of the purchase price premium relative to reported book value given that the acquisition is being consummated at the peak of the real estate cycle. Another concern is that this transaction would significantly increase intangibles–especially given what Fitch said is LFG's historical and recent write-down of intangibles.
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