Breaking News…ignore at your own risk…

by | May 5, 2022 | Saul's Insights | 0 comments

 Breaking News…ignore at your own risk…

ICE (Intercontinental Exchange) purchases Black Knight for 13.1 Billion Dollars.

Is Zillow Next???

May 04, 2022 03:10 PM Eastern Daylight Time

ATLANTA, NEW YORK & JACKSONVILLE, Fla.–(BUSINESS WIRE)–Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, today announced it has entered into a definitive agreement to acquire Black Knight, Inc. (NYSE: BKI), a software, data and analytics company that serves the housing finance continuum, including real estate data, mortgage lending and servicing, as well as the secondary markets. The cash and stock transaction values Black Knight at $85 per share, or a market value of $13.1 billion, and builds on ICE’s position as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry.

TBT…I posted about ICE about a year ago (Post below…The Biggest Company you Never Heard of).

This acquisition (along with ICE’s previous acquisitions) is one that has the power to completely disrupt our legacy real estate industry. The Black Knight acquisition is just one piece of the puzzle.

A few days ago we saw another major acquisition by CoStar.

If CoStar is the Lion coming down the hill, then ICE is the Siberian Tiger coming down the hill. Once we identify the Bear coming down the hill, we will have our slogan for the rest of the year and for 2023:

“Lions, and Tigers, and Bears…oh my!”

From my June 21, 2021 Post:

ICE (Intercontinental Exchange)

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Lesson Plan For The Future

Real Estate Industry Transformation – Connect the Dots. What do you know about Spot Markets and Futures Markets?

The biggest company you NEVER heard of, Intercontinental Exchange (ICE), is a change catalyst in the evolving real estate market. ICE is a Fortune 500 and Fortune Future 50 company formed in the year 2000 to modernize markets.

Intercontinental Exchange Group (ICE) is a global exchange, clearing, financial data and technology company, operating multiple markets and services across nine different asset classes.

ICE operates 13 regulated exchanges, including ICE futures and OTC exchanges in the US, Canada, Europe and Singapore. It also is the parent company of the well-known New York Stock Exchange and related securities exchanges. Today, the company is among the largest exchange groups in the world and has grown dramatically via a succession of acquisitions of other exchanges, technology firms and data service providers.

A publicly traded company since 2005, ICE (NYSE: ICE) lists more than 12,000 derivatives and securities contracts on its markets. Its derivatives exchange properties include five regulated futures exchanges: ICE Futures US, ICE Futures Europe, ICE Futures Canada, ICE Futures Singapore and ICE Endex.

On the securities side, ICE operates five stock exchanges under the NYSE Group: New York Stock Exchange, NYSE Arca, NYSE American, (formerly NYSE MKT, and AMEX), NYSE National (formerly National Stock Exchange) and Chicago Stock Exchange, plus two US equity options exchanges – NYSE Arca Options and NYSE American Options (formerly NYSE AMEX Options) – and a corporate bond platform, NYSE Bonds.

ICE also owns:

Ellie Mae

(Purchased for 11 Billion dollars in October of 2020).

Ellie Mae is a digital platform that serves many of the mortgage industry participants and is a critical player in nearly half of residential mortgages in the United States. Ellie Mae’s flagship product is a platform called Encompass, which serves as a single record-keeping system. Additionally, it serves as a marketplace for connecting customers with additional Ellie Mae services provided by other third-party vendors.

Intercontinental’s rationale for making the acquisition is straightforward, although not obvious. The company sees a huge opportunity to make the mortgage market more liquid and exchangeable, similar to how investors use the NYSE to buy and sell stocks and other financial products.

MERSCORP (purchased in 2010)

MERSCORP owns and operates the MERS System, a national electronic registry that tracks the changes in servicing rights and beneficial ownership interests in U.S.-based mortgage loans. Earlier this month, ICE successfully moved the MERS System infrastructure to the ICE Mahwah data center, an integral requirement for completing the final acquisition of the business.

Simplifile (purchased in 2019)

Simplifile operates a network connecting agents and jurisdictions involved with residential mortgage records.

ICE paid $335 million to acquire Simplifile.

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And yesterday we heard that ICE is in the process of purchasing Black Knight for $13 Billion.

My sources tell me that the deal is priced at 11X revenue. The servicing platform (MSP) is the revenue driver (50% market share). This will require a heart transplant, but it will allow ICE to touch consumers (payments are a big deal).

Total invested by ICE to date over $27B. Compare that with CoStar – $1B for HomeSnap, CityScape and Homes.com which could become the national MLS next year. We expect Zillow to be ICE’s next target.

The hidden play was Optimal Blue and Collateral Analytics which gives ICE near real time coverage of spot markets which is a pre-condition for futures. Futures is the game that Black Knight couldn’t play, but they got a great price.

What are REALTORS going to do about it? It may be too late to do anything but adapt to the new world.

 

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