In a move to address antitrust concerns surrounding its proposed buyout by Intercontinental Exchange (ICE), U.S. mortgage data vendor Black Knight has announced the sale of its Optimal Blue business for $700 million.
The decision comes as the Federal Trade Commission (FTC) scrutinizes ICE’s $11.7 billion deal for Black Knight, expressing worries that the acquisition could result in increased pricing power in the mortgage data market, potentially leading to higher costs for consumers. In an effort to alleviate these concerns, Canadian business software provider Constellation Software has agreed to purchase the Optimal Blue unit.
The acquisition of Black Knight by ICE has faced significant opposition and regulatory hurdles. Recognizing the potential challenges, Black Knight and ICE had previously indicated their willingness to take the matter to court to save the deal, if necessary. However, the sale of Optimal Blue represents a proactive step towards addressing the antitrust concerns raised by the FTC and lawmakers.
Optimal Blue specializes in providing data and technology for pricing and trading mortgages, making it a crucial player in the mortgage data market. The sale of this business unit, coupled with Constellation Software’s previous agreement to acquire Black Knight’s Empower loan origination system business, is an attempt to alleviate regulatory worries. Nonetheless, some analysts suggest that these divestitures might not be sufficient to fully address the concerns surrounding the ICE buyout.
FTC Chair Lina Khan’s firm stance on corporate consolidation has created a more challenging environment for companies seeking mergers without significant concessions. Recent court battles, including one involving Microsoft’s bid for Activision Blizzard, have shown that the FTC is not invincible in defending its antitrust concerns. Such losses have emboldened critics of the FTC, who argue that the agency is overly aggressive and has a propensity for derailing potential deals.
The sale of Optimal Blue to Constellation Software marks Black Knight’s commitment to navigating the antitrust landscape and ensuring a smoother path for the ICE buyout. By shedding business units that could potentially raise pricing concerns, Black Knight aims to demonstrate its dedication to a fair and competitive market. The fate of the ICE-Black Knight deal now rests in the hands of regulators, who will evaluate the divestitures and consider their impact on competition within the mortgage data industry.
As the antitrust review process unfolds, industry stakeholders and market participants will closely watch for updates on the ICE-Black Knight merger. The outcome will not only shape the landscape of the mortgage data market but also have broader implications for corporate consolidation and regulatory oversight in the United States.
