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Intercontinental Exchange (ICE) has agreed to buy to Black Knight in a deal valuing the mortgage software provider at about $13.1bn, as the owner of the New York Stock Exchange (NYSE) makes a huge bet on the future of the US housing market. 

ICE has agreed to pay $85 per share in cash and stock for the Jacksonville, Florida-based company, according to a statement Wednesday.

ICE and other exchange operators have been branching into data and other areas of fintech in recent years as growth stalled in the traditional exchange business. Black Knight would complement Ellie Mae, the mortgage-software provider that ICE agreed to buy for $11bn in 2020.

The deal marks the latest aggressive move by ICE CEO Jeffrey Sprecher, a serial dealmaker who has been eager to expand the company into new markets via acquisitions. ICE even flirted with buying eBay in 2020. With Black Knight, he is essentially doubling down on the future of the US mortgage market. 

Black Knight’s software was used to service about 63% of the active first-lien mortgages in the US in 2021, according to its most recent annual report. The company’s products also help originate loans and evaluate how much properties are worth, among other things. 

“With our expertise in operating networks and marketplaces, our planned acquisition will bring to life a true end-to-end solution for the mortgage manufacturing and servicing ecosystem, benefiting aspiring and current homeowners across the US,” Sprecher said in a statement. 

Foley win

The deal also marks a win for billionaire Bill Foley, founder of title insurance giant Fidelity National Financial. Black Knight spun out from Fidelity National in 2017 and Foley remained chair of Black Knight until 2021. The deal values his 2.2% stake in Black Knight at about $288m, according to data compiled by Bloomberg. 

Black Knight rose 15% to close at $72.84 in New York trading on Wednesday, giving the company a market value of about $11.4bn. ICE fell 4% to $109.86, for a market value of about $62bn. 

Black Knight had been exploring a sale after receiving takeover interest from private equity firms, Bloomberg News reported last month. Based in Jacksonville, Florida, the company provides software, data and analytics to the mortgage and home equity lending and servicing and real estate industries. 

The deal is expected to close in the first half of 2023. Goldman Sachs Group and Wells Fargo advised ICE on the deal while JPMorgan Chase advised Black Knight. 

Bloomberg News. More stories like this are available on bloomberg.com


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