Black Knight Prepared To Spin Off Its Empower And Optimum Blue Companies

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With its merger with Intercontinental Alternate (ICE) on observe to be green-lighted by antitrust regulators, Black Knight says it plans to finish the sale of its Empower and Optimum Blue companies to subsidiaries of Canadian-based software program large Constellation Software program subsequent month.

Black Knight first proposed promoting its Empower origination system [LOS] to Constellation in March so as to clear the way in which for what was envisioned on the time as a $13.1 billion merger with ICE when initially proposed final 12 months. ICE already provides its personal standard mortgage mortgage origination system, Embody, due to its $11.4 billion acquisition of Ellie Mae in 2020.

Though phrases of the Empower sale weren’t disclosed, ICE and Black Knight stated an amended merger settlement valued Black Knight at $75 per share or $11.7 billion — about $1.4 billion lower than when the deal was introduced in 2022. The settlement to promote Empower additionally consists of Black Knight’s Alternate, LendingSpace and AIVA options.

However merely spinning off Empower wasn’t sufficient to fulfill antitrust regulators on the Federal Commerce Fee (FTC) who stated Empower shoppers would nonetheless depend on ancillary providers offered by Black Knight and Optimum Blue. So in July, ICE and Black Knight stated they had been additionally prepared to promote Optimum Blue to Constellation — however provided that the FTC would permit the merger to proceed.

Citing “important progress” in negotiations, attorneys with the FTC, Black Knight and Intercontinental Alternate (ICE) on Aug. 7 requested a federal decide to briefly dismiss a lawsuit the FTC filed in April searching for to remain the merger.

ICE and Black Knight announced Friday that they’ve entered into an settlement containing consent orders with the FTC’s Bureau of Competitors and now count on the merger to shut on Sept. 5.

As soon as the merger closes, the businesses count on to finish the divestitures of the Empower and Optimum Blue companies to subsidiaries of Constellation Software program Inc. inside 20 days.

Black Knight’s Optimum Blue division operates a market platform that connects mortgage lenders and traders, providing instruments that embody product and pricing engines (PPE) for mortgage lenders and brokers and a cloud-based buying and selling atmosphere the place traders should buy mortgages. A lot of the $700 million Optimum Blue deal is to be financed by a $500 million promissory note issued by Constellation to Black Knight.

Constellation Software program says each Empower and Optimal Blue are being acquired by its Perseus working group which acquires and invests in software program companies.

Actual property trade firms under the umbrella of the Perseus working group embody lead technology and get in touch with administration system Market Chief, actual property know-how supplier Constellation1, SmartZip, High Producer and Sharper Agent.

Final 12 months one other Constellation subsidiary, Constellation Mortgage Options, unveiled its NOVA mortgage origination answer billed as a brand new “gold commonplace in mortgage origination tech.”

Previously referred to as Mortgage Builder, Southfield, Michigan-based CMS, was acquired in 2019 by Constellation Real Estate Group (CREG), which is a part of Constellation Software program’s Perseus working group.

Shares in Toronto-based Constellation Software program are trading close to an all-time excessive of $2,829 registered July 19, giving the corporate a market capitalization of $43.7 billion ($59.1 billion Canadian).

Shares in Black Knight and ICE are buying and selling close to their 52-week highs, valuing Black Knight at $11.9 billion and ICE at $66.4 billion.

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Electronic mail Matt Carter