A Deal with Constellation Software Inc. hinges on ICE closing the deal to acquire Black Knight, now valued at $11.7 billion. ICE says it’s prepared to fight FTC in court.

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Real estate software, data and analytics provider Black Knight is ready to sell its Empower loan origination system to an ambitious Canadian-based real estate and mortgage technology provider — but only if the deal helps clear the way for Black Knight’s pending merger with Intercontinental Exchange Inc. (ICE).

In the hopes of resolving concerns raised by competitors and U.S. antitrust regulators, Black Knight and ICE announced Tuesday a deal to sell Empower to a subsidiary of Toronto-based Constellation Software Inc. for an undisclosed sum.

While the deal is subject to ICE closing its acquisition of Black Knight, ICE says it has made a formal commitment to fight antitrust regulators in court, if needed, to obtain the necessary approvals.

Constellation Software Inc., a publicly traded company with a market capitalization of $34.9 billion ($48 billion Canadian), operates dozens of brands across multiple verticals through its operating company Perseus Group, including Market Leader, Zurple and Constellation1.

Last year, subsidiary Constellation Mortgage Solutions (CMS) announced the launch of its NOVA loan origination solution, aimed at setting the new “gold standard in mortgage origination tech,” in September. Formerly known as Mortgage Builder, Southfield, Michigan-based CMS partnered with product and pricing engine Lender Price in October to give NOVA users the ability to source, price and lock loans in real time.

Constellation Mortgage Solutions is part of the Romulus Group, a portfolio of vertical market software (VMS) companies within the Perseus Group.

If a Constellation Software Inc. subsidiary does acquire Black Knight’s Empower, it’s unclear if that would be the end of the road for the NOVA and Mortgage Builder loan origination systems or whether it would continue to offer Empower, Mortgage Builder and NOVA as separate solutions.

Constellation Software Inc. did not immediately respond to Inman’s request for comment. What products it will ultimately offer isn’t a pressing issue since the agreement to sell Empower to a Constellation Software subsidiary is subject to ICE closing its acquisition of Black Knight.

Antitrust regulators have been scrutinizing the deal since at least last June when the Federal Trade Commission (FTC) sent ICE and Black Knight a “second request” for additional information and documents. Last month, Politico reported FTC officials aren’t convinced that Black Knight’s plans to spin off its Empower loan origination system would allay their concerns, citing three anonymous sources “with direct knowledge.”

ICE already offers its own popular mortgage loan origination system, Encompass, thanks to its $11.4 billion acquisition of Ellie Mae in 2020. In a June 8 letter expressing concern about the deal to federal regulators, the Community Home Lenders Association (CHLA) estimated that ICE’s Encompass platform is used to originate about 50 percent of all mortgages and Black Knight’s Empower accounts for another 10 percent.

In announcing plans to spin off Empower, ICE said it “has committed to, among other things, litigate with the FTC, if necessary, to obtain approval of the merger.”

While terms of the proposed sale of Empower were not disclosed, Reuters reported on Feb. 9 that Black Knight was trying to sell the loan origination system for around $400 million. Black Knight and ICE said the agreement to sell Empower also includes Black Knight’s Exchange, LendingSpace and AIVA solutions.

In November, the nation’s biggest title insurer Fidelity National Financial announced it would pay Black Knight $225 million to buy back a title search and order management solution, TitlePoint, under the terms of the 2014 agreement.

ICE and Black Knight said their amended merger agreement values Black Knight at $75 per share, or $11.7 billion — about $1.4 billion less than when the deal was announced in May.

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Email Matt Carter

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