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With its merger with Intercontinental Exchange (ICE) on track to be green-lighted by antitrust regulators, Black Knight says it plans to complete the sale of its Empower and Optimal Blue businesses to subsidiaries of Canadian-based software giant Constellation Software next month.
Black Knight first proposed selling its Empower origination system [LOS] to Constellation in March in order to clear the way for what was envisioned at the time as a $13.1 billion merger with ICE when originally proposed last year. ICE already offers its own popular mortgage loan origination system, Encompass, thanks to its $11.4 billion acquisition of Ellie Mae in 2020.
Although terms of the Empower sale weren’t disclosed, ICE and Black Knight said an amended merger agreement valued Black Knight at $75 per share or $11.7 billion — about $1.4 billion less than when the deal was announced in 2022. The agreement to sell Empower also includes Black Knight’s Exchange, LendingSpace and AIVA solutions.
But simply spinning off Empower wasn’t enough to satisfy antitrust regulators at the Federal Trade Commission (FTC) who said Empower clients would still rely on ancillary services provided by Black Knight and Optimal Blue. So in July, ICE and Black Knight said they were also willing to sell Optimal Blue to Constellation — but only if the FTC would allow the merger to proceed.
Citing “significant progress” in negotiations, attorneys with the FTC, Black Knight and Intercontinental Exchange (ICE) on Aug. 7 asked a federal judge to temporarily dismiss a lawsuit the FTC filed in April seeking to stay the merger.
ICE and Black Knight announced Friday that they’ve entered into an agreement containing consent orders with the FTC’s Bureau of Competition and now expect the merger to close on Sept. 5.
Once the merger closes, the companies expect to complete the divestitures of the Empower and Optimal Blue businesses to subsidiaries of Constellation Software Inc. within 20 days.
Black Knight’s Optimal Blue division operates a marketplace platform that connects mortgage lenders and investors, offering tools that include product and pricing engines (PPE) for mortgage lenders and brokers and a cloud-based trading environment where investors can buy mortgages. Most of the $700 million Optimal Blue deal is to be financed by a $500 million promissory note issued by Constellation to Black Knight.
Constellation Software says both Empower and Optimal Blue are being acquired by its Perseus operating group which acquires and invests in software businesses.
Real estate industry companies under the umbrella of the Perseus operating group include lead generation and contact management system Market Leader, real estate technology provider Constellation1, SmartZip, Top Producer and Sharper Agent.
Last year another Constellation subsidiary, Constellation Mortgage Solutions, unveiled its NOVA loan origination solution billed as a new “gold standard in mortgage origination tech.”
Formerly known as Mortgage Builder, Southfield, Michigan-based CMS, was acquired in 2019 by Constellation Real Estate Group (CREG), which is part of Constellation Software’s Perseus operating group.
Shares in Toronto-based Constellation Software are trading near an all-time high of $2,829 registered July 19, giving the company a market capitalization of $43.7 billion ($59.1 billion Canadian).
Shares in Black Knight and ICE are trading near their 52-week highs, valuing Black Knight at $11.9 billion and ICE at $66.4 billion.
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