CNSWF - Black Knight cut at Truist as divestiture bolsters sale to ICE chances
2023-07-18 10:56:49 ET
Black Knight ( NYSE: BKI ) was downgraded to hold from buy at Truist as the announced sale of its Optimal Blue business increases the chance that BKI's sale to Intercontinental Exchange ( NYSE: ICE ) will close.
ICE and Black Knight ( BKI ) said on Monday that they agreed to sell Black Knight's Optimal Blue business to Constellation Software ( OTCPK:CNSWF ) for $700 million.
The sale "significantly" increases the probability that ICE will close its planned purchase of Black Knight for $75 per share, Truist analyst Andrew Jeffrey wrote in a note on Monday.
"As a result, we see BKI as a balanced risk/reward, given today's move, and we think the stock is fairly valued at nearly 19x our C24E EBITDA," Jeffrey wrote.
The divestiture announcement comes as the companies are trying to appease the Federal Trade Commission, which sued to block the $11.7 billion deal in March , saying the deal would reduce competition and innovation in the market for mortgage loan technology and would drive up costs for lenders and homebuyers.
The hearing for a preliminary injunction from the FTC to block the deal was set for next week, though the parties and the regulator asked the FTC to delay the meeting until next month, and a judge granted their request on Monday.
More on the ICE-Black Knight Deal:
- An Update on How to Profit From the Black Knight-Intercontinental Exchange Merger With a Simple Arbitrage Strategy
- Black Knight ticks higher as Einhorn's Greenlight sees 75% chance of ICE deal closed
- FTC files suit to block Intercontinental Exchange's Black Knight acquisition
- Black Knight and Intercontinental Exchange Go to Court vs. FTC
- Intercontinental Exchange agrees to buy Black Knight for $13B
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Black Knight cut at Truist as divestiture bolsters sale to ICE chances