Intercontinental Exchange Inc. (ICE) has entered into a definitive agreement to acquire Black Knight Inc. in a cash and stock transaction at a market value of $13.1 billion. The transaction, valued at $85 per share, or a total market value of $13.1 billion, with consideration in the form of a mix of cash (80%) and stock (20%). Cash consideration of $10.5 billion is expected to be funded with newly issued debt and cash on hand at the time of the close of the transaction.
Based in Jacksonville, Florida, Black Knight employs approximately 6,500, and is a provider of an integrated ecosystem of software, data, and analytics solutions serving the real estate and housing finance markets.
“Since our founding in 2000, ICE’s simple 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,” said Jeffrey C. Sprecher, Founder, Chair and CEO of ICE. “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.”
According to MarketWatch, news of the merger drove the price of Black Knight shares up 18% to $75.17, as ICE agreed to buy the firm for $85 per share.
The addition of Black Knight’s tech solutions strengthens ICE’s growing mortgage technology business by increasing automation, while harnessing data that can help current homeowners lower their monthly payments, and lessen the likelihood of default.
"Black Knight has been on a successful journey to transform the mortgage industry by providing our clients with powerful, interconnected solutions that help them achieve greater efficiency and better serve their customers,” said Anthony M. Jabbour, Chairman and CEO of Black Knight. “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. 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, following the receipt of regulatory approvals, Black Knight stockholder approval, and the satisfaction of customary closing conditions.
“This transaction will benefit ICE, Black Knight, and our collective shareholders,” said Warren Gardiner, CFO of 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 per share in the first full year.”
According to Yahoo, ICE purchased cloud-based platform Ellie Mae for $11 billion in August 2020, following a $335 million deal for Simplifile in 2019, and the acquisition of MERS, in which ICE took a majority stake in 2016 and purchased outright in 2018.