Black Knight, Inc.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
On May 4, 2022, Black Knight, Inc., a Delaware corporation (“Black Knight”), entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), with Intercontinental Exchange, Inc., a Delaware corporation (“ICE”), and Sand Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of ICE (“Sub”), as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of March 7, 2023 (the “Amendment”, and the Original Merger Agreement as amended by the Amendment, the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Sub merged with and into Black Knight (the “Merger” and, collectively with the other transactions contemplated by the Merger Agreement, the “Merger Transactions”), with Black Knight continuing as the surviving corporation and as a wholly owned subsidiary of ICE. In connection with entering into the Amendment, on March 7, 2023, at the request of ICE, Black Knight entered into an Equity Purchase Agreement (as amended, the “Empower Divestiture Agreement”) with Constellation Web Solutions Inc., a Delaware corporation and a subsidiary of Constellation Software Inc. (“Constellation”), and ICE (solely for the purposes set forth in the Empower Divestiture Agreement) in furtherance of the transactions contemplated by the Merger Agreement. Black Knight and ICE executed the Empower Divestiture Agreement in order to seek to address certain alleged antitrust concerns raised by the U.S. Federal Trade Commission (“FTC”) regarding the transactions contemplated by the Merger Agreement.
Pursuant to the terms and subject to the conditions set forth in the Empower Divestiture Agreement, after the closing of the Merger, Constellation purchased Black Knight’s Empower loan origination system (LOS), including its Exchange, LendingSpace and AIVA solutions (the “Empower Divested Business”) from Black Knight (collectively with the other transactions contemplated by the Empower Divestiture Agreement, the “Empower Divestiture Transaction”).
On July 14, 2023, at the request of ICE, Black Knight entered into an Equity Purchase Agreement (as amended, the “OB Divestiture Agreement”) with Project Badger Holdco Inc. (“Purchaser”), a Delaware corporation and a subsidiary of Constellation, and ICE (solely for the purposes set forth in the OB Divestiture Agreement) in furtherance of the transactions contemplated by the Merger Agreement. Black Knight and ICE executed the OB Divestiture Agreement in order to address certain alleged antitrust concerns raised by the FTC in its lawsuits against Black Knight and ICE regarding the Merger Transactions.
Pursuant to the terms and subject to the conditions set forth in the OB Divestiture Agreement, after the completion of the Merger, Purchaser purchased Black Knight’s Optimal Blue business division (the “OB Divested Business”) from Black Knight (collectively with the other transactions contemplated by the OB Divestiture Agreement, the “OB Divestiture Transaction”). The purchase price payable by Purchaser to Black Knight under the OB Divestiture Agreement was $700 million, comprised of $200 million in cash and a promissory note issued by Purchaser to Black Knight at the closing of the OB Divestiture Transaction (the “OB Divestiture Closing”) in the principal amount of $500 million (the “Note”), subject to specified adjustments. The Note accrues interest at a rate of 7% per annum, compounded annually and payable in arrears. The first cash interest and amortization payment under the Note is due on the day prior to the fifth anniversary of the OB Divestiture Closing and thereafter interest and amortization payments will be due annually on the subsequent anniversaries of that date. The Note matures on the fortieth anniversary of the OB Divestiture Closing, subject to earlier optional prepayment. Black Knight is obligated to transfer the Note within six months of the OB Divestiture Closing to a third party that is not a seller of a mortgage product pricing and eligibility engine or loan origination system products.
On September 5, 2023, the Merger was completed. On September 14, 2023, the Empower Divestiture Transaction and OB Divestiture Transaction were completed. The preceding unaudited pro forma condensed consolidated financial information of Black Knight is presented to illustrate the estimated effects of the Empower Divestiture Transaction and OB Divestiture Transaction on the historical financial information of Black Knight.
Accounting Periods Presented
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2023 was based on the unaudited historical financial statements of Black Knight. The unaudited pro forma condensed consolidated balance sheet gives effect to the Empower Divestiture Transaction, OB Divestiture Transaction and financing activities as if they had been completed June 30, 2023. The unaudited pro forma condensed consolidated statement of earnings for the period ended June 30, 2023 was based on the unaudited historical financial statements of Black Knight. The unaudited pro forma condensed consolidated statements of earnings for the period ended June 30, 2023 and the years ended December 31, 2022, 2021 and 2020 gives effect to the Empower Divestiture Transaction as if it had been completed on January 1, 2020, the first day of Black Knight’s fiscal year. The unaudited pro forma condensed consolidated statements of earnings for the period ended June 30, 2023 and the years ended December 31, 2022, 2021 and 2020 give effect to the OB Divestiture Transaction as if it had been completed on September 15, 2020, the day Black Knight acquired Optimal Blue.
