SANTA ANA — First American Financial Corp. said Thursday it has received shareholder approval to merge its two classes of common stock, paving the way for a corporate stock offering that could raise as much as $38 million for the nation's second-largest title insurer.
First American's Class A and Class B stock will begin trading today on the NASDAQ market as one stock without any class designation, said Jack Derloshon, the company's chief financial officer.
Holders of Class A stock, who had full voting power, will be receiving a 4% increase in stock as compensation for the historically higher trading price of their shares. Holders of Class B, which carried a tenth of the voting rights of Class A shares, will now have full voting rights.
The parent company of First American Title Insurance Co. created the Class B common stock in 1989 as a way of paying for acquisitions and employee benefit plans. But it has used the stock for only one of its acquisitions since then, and meantime some major investors shied away from the dual-class shares.
The company said last month that it would seek shareholder approval to merge the classes.
Derloshon said he expects the Securities and Exchange Commission to approve within the next two weeks the company's previously announced offering of 2.25 million shares. The company hopes to issue the stock publicly by mid-October, he said.
On Thursday, the last day of dual-class trading, the Class A stock closed at $19.25 a share, up $1 a share. The Class B stock did not trade, remaining at Wednesday closing price of $18.25.
First American Title, which holds a 16.2% share of the title-service market, has a network of more than 300 offices and more than 4,000 agents across the nation and in the Bahamas, Bermuda, Canada, Guam, Mexico, Puerto Rico, Virgin Islands and United Kingdom.