(Recasts, adds details, share movement)
Nov 7 (Reuters) - Fidelity National Financial Inc, which controls one of the largest U.S. title insurers, agreed to buy LandAmerica Financial Group for about $126 million in stock as the title insurers seek to consolidate in the midst of a worsening housing crisis.
Shareholders of LandAmerica, the No.3 title insurer, will receive 0.993 shares of Fidelity common stock for each share held, the companies said in a statement.
The deal represents a premium of about 74.5 percent based on LandAmerica's closing price of $4.75 on Thursday.
LandAmerica shares soared as much as 79 percent to $8.49 in pre-market trade. Fidelity National shares rose as much as 8 percent.
Title insurers, who protects home buyers and lenders against claims and legal fees should a dispute over ownership arise, have taken a hit as the worsening housing crisis resulted in lower demand for and lower prices on homes, cutting into their revenue.

"The unprecedented credit freeze and depressed real estate market have negatively impacted our business to the point that it has become increasingly difficult for LandAmerica to remain an independent public company," LandAmerica's Chief Executive Theodore Chandler said.
The deal will reduce the combined debt of the companies by about $250 million before the merger closes. Fidelity, however, does not expect any material change from its current debt to total capitalization ratio of about 30 percent.
Chicago Title Insurance Company, a subsidiary of Fidelity, has agreed to provide a $30 million stand-by secured credit facility as additional liquidity to the company, the company said.
Fidelity estimates about $150 million in operational cost synergies throughout the combined operations, Chairman William Foley said.

(Reporting by Anurag Kotoky in Bangalore, Editing by Dinesh Nair)Keywords: LANDMAERICA/TAKEOVER FIDELITY (anurag.kotoky@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: anurag.kotoky.thomsonreuters.com@reuters.net)

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