Black Knight to sell TitlePoint back to Fidelity for $225M

Option to buy TitlePoint back is triggered by Black Knight's agreement to be sold to ICE Mortgage Technology

Black Knight agreed to sell its TitlePoint business unit to former parent company Fidelity National Financial for $225 million in cash.

A sale of TitlePoint is expected ahead of Black Knight’s planned blockbuster acquisition by Intercontinental Exchange, Inc. 

TitlePoint enables searches for detailed property information, images of documents and maps across the U.S. and is used by title insurance underwriters, title agents and closing attorneys. 

The pending sale is a result of a 2014 agreement that allowed FNF to repurchase TitlePoint in the event of a change in control of Black Knight. (Black Knight was a subsidiary of FNF that went public in an IPO in 2015. In 2017, FNFs stake in Black Knight was distributed to Black Knight’s shareholders.)

“In connection with the pending acquisition of Black Knight by Intercontinental Exchange, Inc. (“ICE”), FNF notified Black Knight of its desire to repurchase TitlePoint,” Black Knight said in a statement. “The sale of TitlePoint is not conditioned on the completion of ICE’s acquisition of Black Knight.”

Black Knight is preparing to be acquired by ICE, the other behemoth in the mortgage data space. In May, ICE announced that it entered into a definitive agreement to acquire Black Knight for $13.1 billion, which valued the company at $85 per share.

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The deal was quickly met with resistance from trade groups and investors voicing antitrust issues – the two giant suppliers of mortgage loan origination software would harm competition in the mortgage tech solutions market.

In its most recent third quarter earnings call, ICE CEO and Chairman Jeffrey Sprecher addressed the concerns. He told analysts that ICE provided the Federal Trade Commission with “extensive information and certified its completeness.”

“Our merger will afford significant benefits to U.S. homeowners and industry stakeholders,” Sprecher said. Sprecher also laid out plans to upgrade the Jacksonville-based technology company’s stack and in return reduce cost per mortgage origination and create new products through the merger. 

The transaction is pending customer regulatory approval and is expected to close in the first half of 2023, according to Katia Gonzalez, senior analyst of investor relations at ICE.

Black Knight reported net earnings of $30 million in the third quarter, a decline of 44% on an annual basis driven by both the software solutions unit and data and analytics division.

Operating income from its software solutions unit posted $142.3 million, a drop of 5% year over year from $150 million. Its data and analytics division raked in $13 million in operating income, also down 24% from last year’s $17 million.

Despite headwinds from a housing market in decline, FNF performed well in the third quarter, with adjusted net earnings of $295 million. The ‘Big Four’ insurer’s title segment recorded revenue of $2.3 billion, down from $2.9 billion a year prior, with adjusted pre-tax earnings of $400 million, compared to $669 million a year ago. Most of this revenue came from agency title premiums, which generated $1 billion in total revenue, a 27% year-over-year decrease.

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