ICE, Black Knight merger deal to close September 5

Intercontinental Exchange Inc. (ICE) and Black Knight announced late Friday an agreement with the Federal Trade Commission (FTC) for the $11.7 billion merger deal to go through. The settlement comes months after the FTC sued ICE alleging antitrust concerns surrounding a buyout of Black Knight. 

According to the agreement, ICE is expected to complete the acquisition of Black Knight on September 5. In addition, the two companies are set to complete the previously announced divestiture of Black Knight’s loan origination system (LOS) Empower business and product and pricing engine unit Optimal Blue to a subsidiary of Constellation Software Inc. within 20 days after the acquisition.

September 1 is the deadline for Black Knight stockholders to decide if they want to receive cash or ICE stock in exchange for their shares as part of the merger deal.

ICE’s planned acquisition of Black Knight — announced in May 2022 — has been stalled due to antitrust concerns raised by the FTC.

The companies that have the two largest loan origination systems would allegedly raise costs to lenders, which would then be passed to homebuyers; and the deal would eliminate competition for product, pricing and eligibility engines (PPEs) and other various ancillary services that are add-ons to LOS, the FTC alleged in a suit against ICE in March 2023.

ICE and Black Knight’s agreement to sell Black Knight’s Empower business and Optimal Blue was to address antitrust concerns, leading to speculations of a possibility that the FTC would settle on the merger deal with ICE and Black Knight. 

However, amid expectations that FTC would settle on the merger deal, the FTC dropped a federal lawsuit seeking to block ICE’s acquisition of Black Knight earlier this month. 

Despite the agreement for the merger deal to go through, antitrust concerns surrounding ICE’s acquisition of Black Knight still linger.

In a recent letter, representative Maxine Waters, the ranking member of the House Committee on Financial Services, raised concerns that the deal will “no doubt” affect the pricing of mortgage loans and mortgage servicing rights.

Waters urged the FTC to ensure safeguard protections to avoid additional pricing pressures in a housing market that already faces serious consolidation and affordability concerns.

In recent years, ICE has sealed several deals to expand beyond its core exchanges business.

ICE’s acquisition of Black Knight would be the second massive mortgage tech deal for ICE, which acquired Ellie Mae from Thoma Bravo for $11 billion in 2020.