MERS owner Intercontinental Exchange to buy Ellie Mae for cash, stock

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Intercontinental Exchange said it agreed to acquire Ellie Mae Inc. from private equity firm Thoma Bravo LLC in a deal that values the mortgage-lending platform at about $11 billion.

The owner of the New York Stock Exchange will pay a combination of stock and cash for Pleasanton, Calif.-based Ellie Mae, according to a statement Thursday. Further terms weren’t disclosed.

Thoma Bravo took Ellie Mae private in a $3.7 billion deal in February 2019.

Ellie Mae operates a cloud-based platform serving the mortgage-finance industry, and its technology will allow ICE to expand its own mortgage-servicing business. ICE reported $90 million in mortgage-servicing revenue for the first half of 2020, a 40% increase from a year earlier. ICE Chief Executive Officer Jeff Sprecher said on an earnings call in July that mortgage servicing is the fastest-growing business on the company's platform.

"We have a business that is part of nearly every U.S. mortgage closing process, collecting, marshaling and storing critical data," Sprecher said in July. "U.S. mortgage back-office workflow is ripe for automation and greater efficiency."

ICE acquired full control of MERS' owner Merscorp Holdings in October 2018. It then purchased Simplifile in May 2019.

Intercontinental Exchange shares have gained 5.3% this year in New York. They rose $1.30 to $97.46 in regular trading Thursday before the announcement.

More than 40% of annual U.S. mortgage originations are processed using Ellie Mae software, according to Erica Bigley, a company spokesperson. That gives Ellie Mae insight into trends such as borrowers’ credit profiles and changing underwriting standards.

Bloomberg News
M&A Digital mortgages Mortgage technology Ellie Mae Merscorp Holdings Secondary market Automated Intelligence and Human Interaction