Black Knight will be selling its loan origination system Empower in a bid to save the merger deal with Intercontinental Exchange (ICE).
“ICE and Black Knight entered into the divestiture agreement in connection with efforts to secure clearance of ICE’s proposed acquisition of Black Knight under the Hart-Scott Rodino Act,” the two companies said in a statement Tuesday morning.
Both companies agreed to sell Black Knight’s Empower business, including its Exchange, LendingSpace and AIVA solutions, to a subsidiary of Canada’s Constellation Software Inc.
“The divestiture transaction is subject to the closing of ICE’s acquisition of Black Knight and other customary closing conditions,” ICE and Black Knight said.
The two companies also amended their deal terms to reduce the valuation of Black Knight to $11.8 billion, about 11% lower than the valuation when the agreement was announced last year.
ICE’s proposed acquisition of Black Knight remains under review by the Federal Trade Commission (FTC). Following the announcement of the deal, trade groups and lawmakers addressed antitrust concerns stemming from ICE becoming the largest mortgage services company in America.
Black Knight’s Empower is the second-biggest loan origination system in the mortgage space, with an estimated market share of around 10 to 15%. ICE’s Encompass LOS is easily the largest, at an estimated 40 to 45% market share.
Reuters reported in February that Black Knight would be seeking $400 million in the sale of Empower.
It’s unknown is whether the sale of Empower would be enough to allay the FTC’s antitrust concerns. Politico recently reported that the government is expected to file a lawsuit to block the merger in March.
