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Black Knight Real Estate Data Company Acquired for $13.1 billion

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International Exchange Inc. (ICE), the firm responsible for operating the New York Stock Exchange, announced on May 4, 2022, that it will buy Black Knight real estate data company for $85 a share, or $13.1 billion.

Black Knight’s business involves providing processing services for mortgage lending companies. Its platform processes close to two-thirds of mortgage loans in the United States, making Black Knight the principal player in that niche industry. The company currently employs around 6,500 employees, with 2,000 located at its Jacksonville, Florida headquarters.

According to the company’s website, Black Knight real estate data, software, and analytics help deliver practical and straightforward real estate solutions. The site profile also mentions that Black Knight real estate data improves relationships with customers and drives up productivity. Additionally, the company touts its Paragon MLS system online as cutting-edge and award-winning, boasting that over 200 associations in Canada and the United States rely on it.

A long, layered 60-year history precedes the company that Black Knight is today. The core of the business that it would become was bought and sold several times and cycled through various names. Founded in 1962, Computer Power Inc. represented its earliest iteration. Alltel Corp acquired Computer Power in 1991. In 2003, the financial processing services portion of Alltel’s business was bought by Fidelity National Financial Inc., a title insurance company. Fidelity got a site in Jacksonville on Riverside Avenue as part of the deal and moved its headquarters from Santa Barbara, California, shortly after the buyout.

In 2006, Fidelity National Information Services, Inc. (FIS) spun off its parent company to independently manage the financial processing services. Later, this business again separated to become Lender Processing Services, Inc. Fidelity National Financial Inc. reabsorbed what it had lost by acquiring LPS in 2014 before breaking it off in 2015, this time with an initial public offering. At last, Black Knight took shape. It is soon to become part of the suite of financial networks managed by International Exchange Inc.

The CEO of Black Knight, Anthony Jabbour, was quoted as saying that ICE shares a vision in common with his company. He expressed confidence that Black Knight’s mission to streamline processes for homeowners while improving experiences for stakeholders and clients would continue. Considering both companies bring significant expertise to the table, Jabbour reportedly believes the acquisition will ultimately benefit all parties by producing ever better methods of helping clients find a home, obtain a mortgage, and manage homeownership.

Jeffrey Sprecher, ICE’s chair and chief executive released a statement asserting that Black Knight real estate data and services “mesh” well with their existing business offerings in the mortgage loan industry. While it is now best known for its 2013 New York Stock Exchange purchase, ICE has operated multiple trading platforms since its founding in 2000. The company has dealt with contracts in commodities as diverse as sugar and crude oil, meaning ICE has arguably influenced the economics of national gasoline and grocery prices in its time.

The $85 stock price that ICE offered and agreed to pay is approximately 30% higher than the trading price had been last month for Black Knight (before there was any public awareness of a deal). While trades had mainly ranged in the $50s, the stock price was only $7 on April 5 when Bloomberg News broke the story that Black Knight was engaged in possible buyout talks with private equity firms. After releasing that information, the stock price jumped to $66.27. After ICE confirmed the transaction, it similarly surged before market closing on May 4, from $9.21 to $72.84.

While ICE did not release any additional details at the time of its announcement, it indicated that more discussion would take place at its next regularly scheduled quarterly meeting in May. The boards for both companies have approved the acquisition; however, Black Knight’s shareholders still need to sign off on it before they may move ahead. Assuming success on that front, the final hurdle will be passing scrutiny from federal regulators. Thus, the expected close of the buyout for the Black Knight real estate data company is not expected until early 2023.

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