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IPO / M&AMortgageTechnology

ICE/Black Knight merger can go forward as FTC approves settlement

Will divest Black Knight’s Empower and Optimal Blue under the binding settlement

Intercontinental Exchange (ICE) received the green light to move forward with its acquisition of Black Knight after the Federal Trade Commission (FTC) accepted a binding settlement.

Under the agreement, both firms will divest Black Knight’s loan origination system (LOS) Empower business and product and pricing engine (PPE) unit Optimal Blue to a subsidiary of Constellation Software Inc, the FTC said in a release on Thursday. 

The commission voted 3-0 to accept the consent order. The binding settlement comes after the FTC, ICE and Black Knight reached an agreement last week for the merger deal to close on September 5. The consent agreement now goes through a public comment period.

The proposed consent order settles FTC charges in March that ICE’s deal with Black Knight, which combines the two top mortgage technology providers, would drive up costs, reduce innovation and limit lenders’ choices for mortgage origination tools.

“This deal as originally structured would have reduced competition in key areas of the mortgage origination process, raising costs for lenders and homebuyers,” Henry Liu, director of the FTC’s bureau of competition, said in a statement.

To address these concerns, the commission’s order provides structural relief and tools to preserve competition.

ICE and Black Knight are required to seek approval from the FTC before acquiring any other businesses related to LOS or PPE for the next 10 years.

Both firms are prohibited from enforcing any non compete or non-solicit provision or agreement against any employee who seeks or obtains a position in the divested businesses.

Constellation would receive a license to resell with Empower certain other Black Knight mortgage-related products and services that would be acquired by ICE.  A monitor will be appointed to oversee compliance with the proposed consent order.

ICE’s planned acquisition of Black Knight went through a bumpy road after the announcement was made in May 2022. 

In addition to both firms’ decision to sell Empower and Optimal Blue to address antitrust concerns, ICE and Black Knight amended their deal terms to reduce the valuation of Black Knight to $11.8 billion from $13 billion.

In April, the FTC filed suit in the U.S. District Court for the Northern District of California to prevent ICE from consummating the Black Knight transaction pending the outcome of the Commission’s administrative challenge.

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.

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