ICE agrees $13.1bn Black Knight takeover

July 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2022 Issue

In a $13.1bn deal that significantly strengthens its mortgage technology ecosystem, global provider of data, technology and market infrastructure Intercontinental Exchange, Inc. (ICE) has acquired software, data and analytics company Black Knight, Inc.

The cash and stock transaction values Black Knight at $85 per share, with consideration in the form of a mix of 80 percent cash and 20 percent stock. The transaction has been unanimously approved by the boards of directors of both companies.

The addition of Black Knight’s technology solutions, real estate and mortgage-related data assets, leading analytics, and its team of mortgage and technology professionals complements and strengthens ICE’s rapidly growing mortgage technology business.

Moreover, the combination will result in improvements in the mortgage lending process for borrowers and lenders by increasing automation and efficiencies that lower the cost of obtaining a mortgage, while harnessing data that can help current homeowners lower their monthly payments and lessen the likelihood of default.

A Fortune 500 company formed in 2000 that operates global exchanges, clearing houses and provides mortgage technology, data and listing services, ICE owns exchanges for financial and commodity markets, and operates 12 regulated exchanges and marketplaces.

“Since our founding, ICE’s simple mission has been to make analogue and opaque financial transactions more digital and transparent,” said Jeffrey C. Sprecher, founder, chair and chief executive of ICE. “Black Knight shares our passion for leveraging technology to serve customers and households.”

Based in Florida, Black Knight has approximately 6500 employees and is a long-time driver of innovation in the mortgage industry, providing a comprehensive and integrated ecosystem of software, data and analytics solutions serving the real estate and housing finance markets.

“Black Knight has been on a successful journey to transform the mortgage industry,” said Anthony M. Jabbour, chair and chief executive of Black Knight. “By combining our expertise, we can deliver significant benefits to our clients and consumers by improving and streamlining the process of finding a home, as well as obtaining and managing a mortgage.”

ICE’s acquisition of Black Knight is the latest in a series of deals since 2016, including Simplifile in 2019 and Ellie Mae in 2020, to support its mortgage servicing business.

“This transaction will benefit ICE, Black Knight and our collective shareholders,” said Warren Gardiner, chief financial officer at Intercontinental Exchange. “Black Knight’s high-growth, recurring revenue stream will further complement our ‘all weather’ business model, while the strength of ICE’s balance sheet, and our combined cash flows, position this transaction to be accretive to adjusted earnings in the first full year.”

Serving as lead financial advisers to Intercontinental Exchange are Goldman Sachs and Co., LLC and Wells Fargo Securities, LLC, with Shearman & Sterling LLP and Morgan Lewis & Bockius LLP serving as legal advisers. JP Morgan Securities LLC is serving as the exclusive financial adviser to Black Knight, with Wachtell, Lipton, Rosen & Katz serving as legal adviser.

The transaction is expected to close in the first half of 2023, following the receipt of regulatory approvals, Black Knight stockholder approval and the satisfaction of customary closing conditions.

Mr Sprecher concluded: “Our planned acquisition will bring to life a true end-to-end solution for the mortgage manufacturing and servicing ecosystem, benefitting aspiring and current homeowners across the US.”

Fraser Tennant