ICE’s Black Knight Takeover Halted by FTC

Are we seeing a more vigilant regulator in the Biden Administration? Some would say that’s so, especially as the Federal Trade Commission (FTC) recently filed suit to block Intercontinental Exchange (NYSE:ICE) and its attempt to buy out Black Knight (NYSE:BKI). The move left investors gravely unsettled, as they pulled out and sent ICE down substantially in Friday afternoon trading.

The FTC got involved for its usual reasons. It claims that the connection between Intercontinental Exchange and Black Knight would ultimately damage competition in the mortgage loan technology front. That, in turn, would drive up costs for lenders and, ultimately, for homebuyers as well. That’s actually a cause for concern; with the housing market being what it is and a lot of first-time buyers effectively priced out of the market, adding costs to the picture can’t be helpful.

Since Intercontinental owns the leading loan origination system software out there, and Black Knight owns the second, it does seem like this would be the kind of thing that would make it much tougher to enter the market. Naturally, Intercontinental disagrees with the FTC’s assessment of the picture, asserting that it’s out to “…automate, streamline, and increase transparency…” when it comes to mortgages. Admittedly, that’s important, but the top two firms getting together to do this might be a bridge too far.

Meanwhile, Wall Street is largely in favor of Intercontinental by just over two to one. ICE stock is considered a Moderate Buy by analyst consensus. Further, with an average price target of $128, it comes with an upside potential of 34.71%.

Disclosure