Fidelity National Information Services (NYSE:FIS) announced today that it would spin off its lender processing division into a new publicly traded company. The decision comes just weeks after the company bolstered its transaction services business with the $1.8 billion acquisition of eFunds.

"We believe the proposed separation will provide more company flexibility and dedicated management focus with respect to product development, capital investment and strategic initiatives, which should ultimately drive higher value to our customers and shareholders," Foley said.

The split will let Fidelity National focus on transaction processing services for banks and thrifts, which sell processing, electronic payment and credit card processing services. Meanwhile, the new spin-off will handle the mortgage end of the business which sells data processing and other technology to mortgage lenders.

Fidelity expects the spin-off to be completed by the middle of 2008, pending approval by the Securities and Exchange Commission and a ruling from the IRS related to the tax-free nature of the transaction. Shares rose over three percent today on the news before falling marginally. Combined, these factors make FIS a stock worth watching!

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