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Intercontinental Exchange’s planned acquisition of mortgage technology provider Black Knight is nearing a go-ahead from antitrust regulators, with Black Knight’s empowered loan origination system and Optimal Blue division stripped from the acquisition.
Lawyers for the Federal Trade Commission, Black Knight and Intercontinental Exchange (ICE) on Monday temporarily dismissed a lawsuit filed by the FTC in April to stop the merger, citing “significant progress” in negotiations. asked a federal judge to do so.
according to Joint Provisions for DismissalThe parties expect to reach an agreement by August 25, detailing the terms under which the merger will be permitted. This agreement consists of a consent order that requires FTC approval. If no agreement is finalized, or if the FTC does not sign a consent order, the federal lawsuit is expected to be dismissed “without prejudice,” and could be reopened.
In an attempt to satisfy antitrust regulators, Black Knight and Intercontinental Exchange (ICE) snipped two big pieces from what was originally envisioned as a $13.1 billion deal announced last year.
In March, the companies announced a deal to sell Black Knight’s Empower loan origination system (LOS) to a competitor, Constellation Web Solutions, a subsidiary of Toronto-based Constellation Software Inc. ICE already offers Encompass, a popular mortgage LOS. $11.4 billion acquisition of Ellie May in 2020.
Terms of the deal with Empower were not disclosed, but ICE and Black Knight said the amended merger agreement would value Black Knight at $75 per share, or $11.7 billion, compared to when the deal was originally announced. also decreased by about $1.4 billion.
But the plan to spin off Empower did not satisfy the FTC, which administrative procedure Objection to ICE’s planned acquisition of Black Knight. FTC attorneys also filed a federal lawsuit in April seeking an injunction against the merger, fearing the merger would be completed before it could file its case in administrative proceedings.
Black Knight’s Proposal to Sell Empower Loan Origination System Rejected [LOS] As an antitrust remedy, the FTC noted that users will continue to rely on ancillary services provided by Black Knight and Optimal Blue.
“The software integration between the lender’s PPE and the LOS enables and automates many of the functions of the lender’s PPE. We serve financiers who originate real estate loans,” FTC attorneys said in a statement. March 9 Complaint. “Next to Optimal Blue is competitor ICE’s Encompass Products and Pricing Services PPE (“EPPS”), currently available only to lenders using Encompass LOS. ”
Last month, Black Knight and ICE announced further concessions — Agreement to sell Black Knight’s Optimal Blue business to a subsidiary of Constellation Software Inc. for $700 million.
The deal with Optimal Blue was funded in large part by a $500 million promissory note issued by Constellation to Black Knight and is contingent on the completion of the sale of Empower. The sale of Empower is contingent on ICE completing its acquisition of Black Knight. In other words, Black Knight is willing to sell Empower and Optimal Blue only if it paves the way for a merger with ICE.
“ICE and the Black Knight [agreement to sell Optimal Blue] to address certain antitrust concerns raised by [FTC] The lawsuits against ICE and Black Knight regarding the merger transaction are still ongoing,” the companies said in a statement. July 17 Regulatory Submissions.
of the black knight Optimal blue split We operate a marketplace platform that connects mortgage lenders and investors, providing tools such as: Product and Pricing Engine (PPE) for mortgage lenders and brokers, and cloud-based trading environment Where an investor can purchase a mortgage.
Optimal Blue’s proposed sale opens the door to ongoing negotiations between FTC attorneys, ICE and Black Knight.
“The Optimal Blue marketing plan is an important development in this matter, and it will take time before it goes on sale.” [FTC attorneys] Advise the Commission by analyzing the impact of the sale on administrative proceedings and discussing possible resolutions of pending issues with the accused,” FTC Senior Trial Counsel Abby Dennis wrote in the letter. . Motion 19 July To put the brakes on administrative procedures.
The FTC’s administrative process, which was scheduled to begin on September 25, was due to begin. withdrawn from judgment Until August 16th.
Black Knight StockAfter trading at just $53.15 last year, it hit a 52-week high of $74.93 on Monday and closed at $74.36, up 4% from Friday’s close. Stocks on the Intercontinental Exchange is also trading near a 52-week high and closed at $116.07 on Monday, up 2%.
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