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- The acquisition will be financed with $10.5 billion in cash (80%) and a stock consideration valued at $2.6 billion (20%).
Intercontinental Exchange Inc. (ICE), a global provider of data, technology, and market infrastructure, announced Wednesday it had entered into a definitive agreement to acquire Black Knight Inc. a software, data, and analytics company that serves the housing finance industry, including real estate data, mortgage lending, and servicing, as well as secondary markets.
The cash and stock transaction values Black Knight at $85 per share, or a market value of $13.1 billion, and builds on ICE’s position as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry, company officials said. The valuation at $85 per share is slightly above the 52-week high of $84.27 for Black Knight's stock.
According to company officials, the boards of directors of both companies have approved the deal.
Black Knight is a long-time driver of innovation in the mortgage industry, ICE officials said. It provides a comprehensive and integrated array of software, data, and analytics solutions serving the real estate and housing finance markets. The Black Knight helps organizations lower costs, increase efficiencies, grow their businesses, and reduce risk, ICE said.
Jeffrey C. Sprecher, founder, chairman, and CEO of ICE said that since the company’s founding in 2000, its mission has been to make analog and opaque financial transactions more digital and transparent, beginning with commodity markets, extending across a large array of asset classes, and most recently working to help streamline the mortgage industry.
“Black Knight shares our passion for leveraging technology to serve customers and households, and, with our expertise in operating networks and marketplaces, 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 United States,” Sprecher said.
Company officials said 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.
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, officials said.
Anthony M. Jabbour, chairman and CEO of Black Knight, said the company has been on a successful journey to transform the mortgage industry by providing its clients with powerful, interconnected solutions that help them achieve greater efficiency and better serve their customers.
“We believe this combination is the right next step in that journey. Black Knight and ICE share a common vision and commitment to deliver a better experience for our clients and the stakeholders we serve, and to ultimately streamline the homeownership process,” Jabbour said. “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.”
The transaction is expected to close in the first half of 2023, pending regulatory approvals, Black Knight stockholder approval, and the satisfaction of customary closing conditions, officials said.
The acquisition will be financed with $10.5 billion in cash (80%) and a stock consideration valued at $2.6 billion (20%). Black Knight shareholders can elect to receive either cash or stock, subject to proration, with the value of the cash election and the stock election equalized at closing, ICE officials said.
Shares of Black Knight, which trade under the symbol BKI on the New York Stock Exchange, were trading around $72.32 per share this morning.
On his blog "The Chrisman Commentary," Rob Chrisman wrote Thursday that tongues are wagging about the deal and said ICE's cash-and-stock offer of $85 per share is a premium of nearly 34 percent to Black Knight's close on Tuesday.
He also shared some messages related to the deal :
"Yesterday my phone and email had messages that included, “Volume is declining everywhere: is this someone trying to catch a falling knife?” “This deal makes zero sense. $85 a share is Black Knight’s 52-week high.” “Interesting.” “Lots of dominoes will fall in the coming months as a result.” “Amazing!” “Good news! No third-party review for their products now!” “This is a big ‘Wow’ although the market knew that the MSP (servicing platform) was something that ICE wanted and makes sense. But I wasn’t sure if having two LOS (systems) would add too much redundancy.”
Atlanta-based ICE employs about 2,900 people, while Black Knight, based in Jacksonville, Fla. employs about 6,500 people.