- Black Knight, Inc. agrees to sell its Optimal Blue mortgage data unit for $700 million to Constellation Software Inc. in response to FTC antitrust concerns and to secure regulatory clearance for its acquisition by Intercontinental Exchange, Inc. (ICE).
- The FTC objected to the merger between Black Knight and ICE, citing potential negative impacts on fees, innovation, and choices in the home financing process.
- The sale of Optimal Blue is part of Black Knight’s efforts to address regulatory concerns, but the FTC indicates it alone won’t satisfy their worries.
In response to U.S. Federal Trade Commission (FTC) antitrust concerns, Black Knight, Inc., a Jacksonville-based software, data, and analytics company, has agreed to sell its Optimal Blue mortgage data unit for $700 million to Constellation Software Inc., based in Toronto, Canada.
The move to spin off Optimal Blue comes as part of Black Knight’s effort to secure regulatory clearance for its $13.1 billion acquisition by Intercontinental Exchange, Inc. (ICE). The FTC previously objected to the merger, stating it could result in higher fees, less innovation, and fewer choices in the home financing process. The Biden Administration has made it a hallmark to crack down and large industry mergers and acquisitions that might run afoul of antitrust laws.
Black Knight, employing over 6,000 people, initially acquired a 60% ownership stake in Optimal Blue in 2020. The company’s agreement with Constellation will involve a payment of $200 million in cash, with the remaining $500 million financed by a promissory note issued by Constellation to Black Knight at the close of the transaction. None of the companies involved have announced how they’ll manage the employees and facilities involved.
The deal between ICE and Black Knight, announced in July 2022, was seen as a move that could significantly strengthen ICE’s mortgage technology ecosystem. However, the FTC voted unanimously to bring an administrative complaint against the merger, stating it would “reduce competition in key areas of the mortgage process, ultimately raising costs for lenders and homebuyers.”
Black Knight’s decision to divest its Optimal Blue unit, which provides software, data, and analytics to the real estate and housing finance markets, is one of several maneuvers aimed at addressing the FTC’s concerns, but the federal regulatory body says the Optimal Blue transaction alone won’t be enough to satisfy their concerns.
The transaction, originally expected to close in the first half of 2023, is pending the receipt of regulatory approvals, Black Knight stockholder approval, and the satisfaction of customary closing conditions. The sale of the Optimal Blue unit to Constellation is also subject to the closing of this acquisition.
Black Knight has played a crucial role in Jacksonville’s economy and innovation within the mortgage industry. Its merger with ICE, along with the sale of its Optimal Blue unit, is expected to reshape the landscape of mortgage technology and data services industry, impacting both local and national markets.