Canada’s Constellation Software Inc. has agreed to pay US$700 million for the Optimal Blue division of Black Knight Inc. in a deal that could allow the owner of the New York Stock Exchange to become the top mortgage services provider in the United States.
The Perseus operating division of Toronto-based Constellation will pay US $200 million in cash for Optimal Blue, which provides data services to the mortgage industry, and will finance the remaining US $500 million with a 40-year, 7.5% interest promissory note, per the terms of the arrangement.
However, the agreement is conditional on Intercontinental Exchange Inc., the company that owns the NYSE, first concluding its uncertain $11.7 billion US acquisition of mortgage software firm Black Knight. This is due to the fact that Black Knight will only sell Optimal Blue to Constellation once it has merged with ICE.
Owning Black Knight would make ICE the biggest mortgage software provider in the US because in 2020, ICE paid private equity firm Thoma Bravo US $11 billion to acquire mortgage automation company Ellie Mae.
The U.S. Federal Trade Commission asked a federal court in Northern California to temporarily halt the ICE-Black Knight merger in April, citing antitrust concerns. The issue will be heard on July 24, and a decision is anticipated before the end of the month.
As part of ICE’s efforts to placate regulators, Constellation decided to purchase Black Knight’s loan origination system company Empower in March. Empower assists banks in creating loan documentation. Victoria Graham, a spokeswoman for the FTC, was asked if Black Knight’s willingness to now divest Optimal Blue would be sufficient to obtain regulatory permission. She declined to comment.