Analysts predict that the ICE-Black Knight deal will go through
After a conversation with executives from Boston Consulting Group, analysts at Keefe Bruyette & Woods stated that the regulatory hurdles are unlikely to stop Intercontinental Exchange’s purchase. According to Yahoo Finance, Black Knight traded at $58.49 per shares after opening at $58.61 on Thursday. It reached its highest point for the day at $60.55 within the hour. KBW’s hosts included Ryan Tomasello (who covers Black Knight) and Kyle Voigt (an analyst for ICE). Industry observers, such as David Stevens, the former CEO of the Mortgage Bankers Association, believe that the letter could cause the FTC to demand more extensive divestitures than Empower or even stop it altogether. Stevens stated that “Time is not on the transaction’s side and I believe the longer it goes, the worse it plays out.” In December, Stevens, an industry observer, said that Empower, the second most popular LOS, was not being sold by ICE because it serves a different market to Encompass, which is the No. 1.Ironically, Black Knight just won a major win. loanDepot will integrate its proprietary system, mello with Empower. This is because Empower serves a different market than Encompass, the No. 1 LOS. Mike Cagney, CEO and co-founder at Provenance blockchain, has expressed concerns about the servicing side. Provenance and Figure Technologies have a relationship to Black Knight competitor Sagent. Cagney compared the merger to what happened to Taylor Shift concert tickets due to the Ticketmaster/Live Nation merger. The panelists at the BCG discussion were less concerned about the threat to the MSP platform Sagent. The report stated that healthy competition bodes well for the FTC’s review (or ICE’s defense in court) of the merger. But the bigger challenge facing the parties is the possibility that mortgage volume will continue shrinking in 2023. The report stated that “From a fundamental standpoint, we came away feeling slightly more negative about headwinds for Black Knight or ICE from the depressed outlook on mortgages, including a weakening sales environment and potential share shifts within the origination and servicing market.” “BCG presented a $1.5 trillion forecast for mortgage originations in 2023. This is below the industry’s $1.7 trillion-$1.9 billion range. The report was published before Fannie Mae’s January outlook for $1.64 Trillion in 2023 mortgage production.