ICE's Black Knight purchase to close on Sept. 5

Intercontinental Exchange's acquisition of Black Knight should close on Sept. 5 following the parties entering into a consent order with the Federal Trade Commission.

This latest agreement was announced after the market closed on Aug. 25, a deadline for the creation of an agreement containing consent orders that both sides entered into when federal antitrust proceedings were voluntarily dismissed on Aug. 7. 

ICE deserves congratulations, in particular for their perseverance in pursuing the transaction, said David Stevens, CEO of Mountain Lake Consulting. The agreement was reached in May 2022.

"I think for the mortgage finance industry, broadly, we all hope that they deliver on the efficiencies that they are pledging to bring," said Stevens, the former Federal Housing Commissioner and CEO of the Mortgage Bankers Association. "And at the same time we'll be watching for pricing strategy and things of that sort from them as they go forward."

While the Biden Administration promised a tougher look at large merger transactions, it also suffered several courtroom losses on the matter, including in the UnitedHealth/Change Health and Microsoft/Activision Blizzard deals. The UnitedHealth deal was cited as a precedent, as the government failed to convince a judge to quash the transaction even though a divestiture was taking place.

Intercontinental Exchange was hoping not to have to conduct any unit sales, but did reach agreements to do so.

Those divestitures, Black Knight's Empower loan origination system and Optimal Blue product and pricing engine to Constellation Software, are supposed to take place within 20 days after the merger is completed.

The FTC was unable to offer anyone to comment. ICE and Black Knight did not return a request for comment.

Monday morning, for the first time since the revised terms of the deal was announced to include the Empower sale, Black Knight's stock exceeded above the $75-per-share price ICE was paying for the technology company. It opened that morning at $75.64 per share, after closing on Friday at $74.76.

Following dismissal of the legal proceedings, on Aug. 22, Maxine Waters, now the ranking of the House Financial Services Committee, sent a second letter to chairperson of the Federal Trade Commission Lina Khan (the first being sent in December 2022) again calling for heightened scrutiny of the transaction.

Unlike the review from the FTC, which looked primarily at areas where ICE and Black Knight directly competed, critics were worried about creating a very large company that, in addition to having the leading origination and servicing platform, also has involvement in other parts of the mortgage transaction.

It was not just politicians that expressed concerns about the merger. Some in the industry also had qualms, but they didn't ever question the credibility and strength of ICE as an acquirer, Stevens said.

In particular, the Community Home Lenders of America were outspoken in opposition. Just days prior to motion to dismiss being filed, the group sent a letter not just to the FTC, but the Consumer Financial Protection Bureau, declaring if this merger was approved, "there must be a process to monitor and curtail ICE anti-competitive actions, either as a part of an agreement with the FTC or through CFPB monitoring and use of statutory authorities to prevent anti-consumer actions."

Another voice against the deal was Mike Cagney, CEO of Figure Technologies, whose Digital Asset Registration Technologies business is working on a blockchain alternative to the MERS registry already owned by ICE; he wrote an op-ed also alleging the anti-competitive nature of the deal.