Black Knight sells unit to address FTC concerns on ICE deal

(Reuters) – Intercontinental Exchange Inc (ICE) and Black Knight Inc on Tuesday agreed to sell one of the mortgage data vendors unit to quell antitrust concerns, but said they would take the battle to court to save the deal, if necessary.

Black Knight‘s Empower loan origination system unit, which helps mortgage lenders manage costs and reduce processing time for loan applications, will be sold to a unit of Canada’s Constellation Software Inc, the two companies said.

Black Knight shares rose 4.4% , while those of the New York Stock Exchange-owner gained nearly 1.4%.

The companies also amended their deal terms to reduce the valuation of Black Knight to $11.7 billion, nearly 11% lower than the valuation it had fetched when the agreement was announced last year.

The deal has come under scrutiny from the Federal Trade Commission amid concerns from some U.S. lawmakers that the pricing power ICE would gain in the mortgage data market could lead to higher costs for consumers.

“ICE has committed to, among other things, litigate with the FTC, if necessary, to obtain approval of the merger,” it said.

U.S. antitrust regulators have taken a tough stance against corporate consolidation, waging battles against companies across industries including airlines, technology and finance.

Empower and ICEs Encompass unit are the top two vendors for loan origination software, jointly controlling upwards of 60% of the market, according to the Community Home Lenders Association, an industry group which has lobbied against the deal.

Last month, Reuters had reported the companies were planning to shed Empower.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)