ICE, Black Knight comply with promote Optimum Blue to Constellation Software program to avoid wasting the merger deal 

Intercontinental Alternate (ICE) and Black Knight agreed to promote Black Knight’s product and pricing engine unit Optimum Blue enterprise to a subsidiary of Canada’s Constellation Software program in an effort to avoid wasting the merger deal.

The $700 million proposed transaction features a fee by Constellation of $200 million in money, with the rest financed by a $500 million promissory notice issued by Constellation to Black Knight, as a subsidiary of ICE, on the closing of the transaction, the 2 corporations introduced Monday.

ICE and Black Knight entered right into a divestiture settlement in reference to efforts to safe regulatory clearance of ICE’s proposed acquisition of Black Knight, a $13.1 billion mega-deal introduced in Could 2022. 

ICE’s proposed acquisition of Black Knight stays beneath evaluate by the Federal Commerce Fee (FTC). Following the announcement of the deal, commerce teams and lawmakers addressed antitrust issues stemming from ICE changing into the most important mortgage providers firm in America.

The 2 corporations have been discovering methods to quell antitrust issues. In March, ICE and Black Knight additionally agreed to promote Black Knight’s mortgage origination system Empower enterprise – together with its Alternate, LendingSpace and AIVA options – to a subsidiary of Constellation in March.

ICE and Black Knight additionally amended their deal phrases to scale back the valuation of Black Knight to $11.8 billion, about 11% decrease than the valuation when the settlement was introduced final yr. 

The divestiture transaction of Optimum Blue is topic to the closing of ICE’s acquisition of Black Knight, the closing of Constellation’s acquisition of Black Knight’s Empower enterprise and different customary closing situations.

Analysts at funding banking agency Keefe, Bruyette & Woods (KBW) had mentioned a divestiture of Black Knight’s Optimum Blue can be a possible path to ensure the merger take care of ICE earlier this month. 

KBW pointed to Constellation being the “most pure suitor” as the client and the best window of timing to divest Optimum Blue can be upfront of the preliminary injunction listening to set to start on July 24, KBW mentioned in a notice. In reference to the announcement, the FTC filed a joint movement with ICE and BKI to postpone the trial to August 14-16.

In April 2023, the FTC petitioned a California federal courtroom to difficulty a brief restraining order (TRO) and preliminary injunction (PI) that forestalls ICE from going ahead with the deal to purchase Black Knight. The objective was to present the fee time to pursue in-house litigation in opposition to the merger.

The Federal District Courtroom for the Northern District of California will rule on the preliminary injunction later this month. 

If the merger goes by, it could be the second current main mortgage deal for ICE, and would observe the acquisition of Ellie Mae from Thomas Bravo for $11 billion in 2020.