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Intercontinental Exchange, Inc. 8-K Report, Material Agreement (Mar 7, 2023)

Filed March 7, 2023For Securities:ICE

Summary

Intercontinental Exchange, Inc. (ICE) has filed an 8-K detailing significant amendments to its previously announced Agreement and Plan of Merger with Black Knight, Inc. The primary change is a reduction in the per-share merger consideration, now offering a mix of cash and ICE common stock. This amendment is directly linked to a Divestiture Agreement with Constellation Software Inc. to address antitrust concerns, specifically involving Black Knight's Empower loan origination system (LOS) business. These changes necessitate a new vote from Black Knight's stockholders. Investors should note that the deal's structure has been adjusted, including revised efforts for obtaining antitrust clearance and updated termination provisions. The closing date has been extended to November 4, 2023, with specific conditions around the divestiture and litigation efforts to secure regulatory approval. The company also clarified closing condition assurances. These amendments reflect a strategic effort to navigate regulatory hurdles while maintaining the acquisition's momentum.

Key Highlights

  • 1ICE and Black Knight amended their merger agreement, reducing the per-share merger consideration.
  • 2The deal now includes a divestiture of Black Knight's Empower loan origination system (LOS) business to Constellation Software Inc. to satisfy antitrust regulators.
  • 3ICE's obligations to obtain antitrust clearance have been clarified, requiring the effectuation of the divestiture and litigation to overcome challenges.
  • 4The merger termination date has been extended to November 4, 2023, from the original May 4, 2023 deadline.
  • 5A $725 million termination fee is payable to Black Knight if stockholders fail to approve the merger, with new conditions outlined.
  • 6Black Knight stockholders will be required to vote on the amended merger agreement.
  • 7The company provided assurances regarding the satisfaction of closing conditions as of the amendment date.

Frequently Asked Questions

The per-share merger consideration has been reduced. Shareholders will now have the option to receive either a cash amount (calculated based on a base of $68.00 plus a component tied to ICE's average stock price over a ten-day period) or a number of ICE common stock shares, determined by the cash consideration and the average ICE stock price. The final mix is subject to proration to ensure the total cash payout does not exceed approximately $10.5 billion.

ICE is divesting Black Knight's Empower loan origination system (LOS) business, including its Exchange, LendingSpace, and AIVA solutions, to Constellation Software Inc. This divestiture is a direct response to antitrust concerns raised by the U.S. Federal Trade Commission regarding the merger.

ICE's 'reasonable best efforts' obligation to secure U.S. antitrust clearance now explicitly includes completing the divestiture of the specified Black Knight business. Furthermore, ICE is obligated to litigate against any governmental entity or private party challenging the merger under U.S. antitrust law if necessary to prevent, impede, or delay the transaction.

The deadline for the merger to be consummated has been extended to November 4, 2023. A $725 million termination fee is payable by ICE to Black Knight if the merger agreement is terminated due to Black Knight's stockholders failing to approve it, unless certain conditions related to competing takeover proposals or adverse recommendations are met.