FTC drops antitrust lawsuit against ICE-Black Knight merger

The Federal Trade Commission has withdrawn an antitrust lawsuit that sought to block Intercontinental Exchange from buying home mortgage software provider Black Knight.

Why it matters: FTC chair Lina Khan has regularly sought court over compromise, but might be changing her tactics after a series of legal losses.

Backstory: ICE, the Atlanta-based owner of the New York Stock Exchange, agreed in May 2022 to pay $13.1 billion, or $85 per share, for Jacksonville, Florida-based Black Knight.

• The FTC sued the following March, arguing that the proposed merger would "drive up costs, reduce innovation, and reduce lenders' choices for tools necessary to generate and service mortgages."
• At the time, ICE already already had agreed to sell Black Knight's Empower loan origination business, but the FTC didn't find that divestiture sufficient.
• ICE and Black Knight also reduced the deal value to around $11.7 billion, or $75 per share.

Fast forward: Then, last month, ICE also agreed to sell Black Knight's Optimal Blue product pricing and eligibility engine for $700 million.

• The buyer for both assets is Canada's Constellation Software, with the deals contingent on ICE completing its Black Knight deal.

Caveat: The two sides continue to negotiate, despite the FTC dropping its lawsuit, and the detente could dissipate if a final agreement isn't reached by Aug. 25.