BKI - FTC files suit to block Intercontinental Exchange's Black Knight acquisition

2023-03-09 14:09:13 ET

The Federal Trade Commission has taken action on Thursday to block Intercontinental Exchange's ( NYSE: ICE ) proposed acquisition of Black Knight ( NYSE: BKI ), saying the deal would reduce competition and innovation in the market for mortgage loan technology and would drive up costs for lenders and homebuyers.

Black Knight ( BKI ) stock fell 1.1% in Thursday afternoon trading and Intercontinental Exchange ( ICE ) dropped 1.8% . In the past six months, as the deal delay dragged on, BKI shares have slipped 11% . ICE originally agreed to acquire BKI in May 2022 for ~$13B at the time.

"This deal would reduce competition in key areas of the mortgage process, ultimately raising costs for lenders and homebuyers," said Patty Brink, acting deputy director at the FTC's Bureau of Competition.

Intercontinental ( ICE ) owns the dominant loan origination system (LOS), software used to manage documents and workflow required to generate a mortgage and Black Knight owns the second-largest LOS, known as Empower, in the U.S. The deal would also harm competition in product pricing and eligibility engines ((PPEs)) and other ancillary services to LOS, the FTC said.

Black Knight ( BKI ) has proposed a deal to sell Empower LOS and some related services to Constellation Web Solutions. But the FTC, according its complaint, says "the proposal does not address the anticompetitive effects in the market for PPE software and would not replace the intense competition between ICE and Black Knight in the LOS market."

Earlier this week, Bloomberg reported that the FTC was poised to file a lawsuit challenging the sale.

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