ICE, Black Knight merger on track to close next week
Following an FTC settlement in which Black Knight agreed to sell off a portion of its company, the deal is set to close on Sept. 5.
- The $11.7 billion deal will bring together two large real estate technology companies that provide products and services to the mortgage industry.
- The FTC previously moved to block the deal, but approved a consent order after several steps were taken to resolve antitrust concerns.
- Some in the industry are concerned that ICE will now dominate the mortgage technology market.
The FTC has cleared the way for a major technology merger involving one of the biggest players in real estate data and analytics.
On Aug. 31, the Federal Trade Commission approved a consent order to resolve antitrust concerns around Intercontinental Exchange's proposed acquisition of Black Knight. The settlement comes after Black Knight agreed to divest a portion of its company, including selling Optimal Blue to Constellation Software for $700 million. Black Knight acquired Optimal Blue, a company providing secondary marketing automation services to the mortgage industry, in 2020.
Black Knight had previously agreed in March to sell its Empower loan origination system to Constellation.
Following the divestitures, the amended merger agreement now values Black Knight at $11.7 billion. With the FTC consent order in place, the deal is expected to close on Tuesday, Sept. 5.
The acquisition, which brings together the products of services of two powerhouses in the mortgage and real estate technology space, will enable ICE to expand its offerings as it gains Black Knight's Multiple Listing Service platform, mortgage technology products and real estate data.
"This deal as originally structured would have reduced competition in key areas of the mortgage origination process, raising costs for lenders and homebuyers," said Henry Liu, Director of the FTC's Bureau of Competition. "To address these concerns, the Commission's order provides structural relief and a variety of tools to preserve competition in these critical markets."
The consent order includes several requirements that will remain in place for the next 10 years, such as getting prior approval from the FTC before reacquiring a divested asset.
Some have expressed concern that a deal of this size will make ICE an overly dominant player, particularly in the mortgage industry. David Stevens, former head of the Mortgage Bankers Association, told the Financial Times that while he's a fan of ICE, this could have lasting implications for the market.
"Here we have a very sophisticated, very competitive company being given the opportunity to become the largest monoline entity in the mortgage technology space, which could theoretically begin to crowd out newcomers," Stevens was quoted as saying in the Aug. 12 article.