ICE, Black Knight to Sell Unit in Bid for FTC Deal Approval

Lynn Doan and Leah Nylen, Bloomberg News

Signage outside the Federal Trade Commission (FTC) headquarters in Washington, DC, US, on Friday, Feb. 17, 2023. A slew of business groups joined the US Chamber of Commerce in opposing the FTC's proposal to ban non-compete agreements, arguing it would limit their ability to protect confidential information. , Bloomberg

(Bloomberg) -- Intercontinental Exchange Inc. agreed to divest Black Knight Inc.’s loan origination business in a bid to persuade the Federal Trade Commission to allow its acquisition to move forward.

ICE and Black Knight have agreed to the sale of Black Knight’s Empower loan origination system business to Constellation Software Inc., the companies said in a statement Tuesday. The deal as proposed would create a near monopoly in loan origination software: Exchange operator ICE’s Ellie Mae Inc. operates the Encompass platform which is the most widely used for loan origination. Black Knight’s Empower is the second-biggest player in that market.

ICE and Black Knight have framed the deal as an effort to create a platform that would help lenders throughout all stages of a mortgage from a customer’s initial home search through loan servicing and potential default.

The Empower divestiture may not be enough to sway regulators, who have concerns that the merged company would have the incentive to bundle all of its services, shutting out rivals that only offer software for one part of the mortgage workflow.

The FTC — which has been reviewing the proposed merger since last year — is expected to sue over the merger as soon as Thursday, two people with knowledge of the matter said on Monday.

“ICE has committed to, among other things, litigate with the FTC, if necessary, to obtain approval of the merger,” the company said.

Amended merger terms now value Black Knight at $75 per share, with a market value of $11.7 billion, according to the statement. It was previously valued at $13.1 billion.

(Updates to add additional details on divestiture throughout.)