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Acquisitions and Divestitures | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures Black Knight, Inc. On September 5, 2023, we acquired 100% of the equity interests in Black Knight, Inc., or Black Knight, for aggregate transaction consideration of approximately $11.8 billion. The aggregate cash component of the transaction consideration was $10.5 billion. We issued 10.9 million shares of ICE common stock to Black Knight stockholders, which was based on the market price of our common stock and the average of the volume weighted averages of the trading prices of our common stock on each of the ten consecutive trading days ending three trading days prior to the closing of the merger. We expect that this transaction will build on our position as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S. residential mortgage industry. We believe the Black Knight ecosystem adds value for clients of all sizes across the mortgage and real estate lifecycles by helping organizations lower costs, increase efficiencies, grow their businesses, and reduce risk. On September 14, 2023, or the Divestiture Date, in connection with the merger agreement, we sold Black Knight's Optimal Blue and Empower loan origination system, or LOS, businesses, or the Divestitures, to subsidiaries of Constellation Software, Inc. The cash proceeds from the Divestitures were $241 million. The structure of the Optimal Blue transaction also included a promissory note with a face value of $500 million, or the Promissory Note, issued by the purchaser to Black Knight, as a subsidiary of ICE, at the closing of the transaction. The Promissory Note had a 40-year term with a maturity date of September 5, 2063, and a coupon interest rate of 7.0% per year. The Promissory Note was valued at $235 million on the Divestiture Date. In accordance with Accounting Standards Codification, or ASC, 805, Business Combinations, or ASC 805, as well as ASC 360, Impairment and Disposal of Long-Lived Assets, we are required to measure an acquired long-lived asset or disposal group that is classified as held for sale at the acquisition date at fair value less cost to sell. Accordingly, there was no gain or loss recognized on the Divestitures. For the period between the acquisition date of September 5, 2023 through the Divestiture Date, the discontinued operations of Empower and Optimal Blue were immaterial. Pursuant to the Agreement Containing Consent Orders entered into between the Federal Trade Commission, or the FTC, and ICE and Black Knight, the Promissory Note was required to be sold within six months of the Divestiture Date. We elected the fair value option for the right to receive the net proceeds of the sale of the Promissory Note. As of December 31, 2023, we wrote down the value of the Promissory Note to $75 million based on Level 3 inputs (Note 14), resulting in a fair value loss of $160 million. In February 2024, the FTC approved the buyer of the Promissory Note, and we completed the sale of the Promissory Note and received the $75 million of proceeds thereafter. The net fair value of the consideration transferred for Black Knight was approximately $11.4 billion as of the acquisition date, which consisted of the following (in millions):
| Transaction Consideration |
Cash | $ | 10,542 |  |
ICE common stock* | 1,274 |  |
Converted vested Black Knight awards | 22 |  |
Total purchase price | $ | 11,838 |  |
Less: Divestitures | (476) |  |
Total net purchase price | $ | 11,362 |  |
*Fair value of the ICE common stock was based on the ICE closing stock price on September 1, 2023, the last business day prior to the acquisition close. The purchase price has been allocated to the net tangible and identifiable intangible assets and liabilities based on the respective estimated fair values on the date of acquisition. The excess of the purchase price over the net tangible and identifiable intangible assets has been recorded as goodwill, of which $186 million is expected to be deductible for tax purposes. Goodwill represents potential revenue synergies related to new product development, various expense synergies and opportunities to enter new markets, and is assigned to our Mortgage Technology business segment. The net purchase price allocation is as follows (in millions):
| Net Purchase Price Allocation |
Cash and cash equivalents | $ | 108 |  |
Property and equipment | 120 |  |
Goodwill | 9,441 |  |
Identifiable intangibles | 4,948 |  |
Debt acquired | (2,397) |  |
Other assets and liabilities, net | 25 |  |
Deferred tax liabilities on identifiable intangibles | (1,270) |  |
Other deferred tax assets | 387 |  |
Net purchase price | $ | 11,362 |  |
In performing the net purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Black Knight business. For the identified intangible assets, the fair values have been determined using the income and cost approaches and are partially based on inputs that are unobservable including forecasted future cash flows, revenue and margin growth rates, customer attrition rates and discount rates that require judgement. The following table sets forth the components of the intangible assets associated with the acquisition as of September 30, 2024 (in millions, except years):
| Acquisition-Date Fair Value |  | Weighted average life (Years) |
Developed Technology | $ | 1,176 |  |  | 10 |
Trademarks/Tradenames | 159 |  |  | 19 |
Customer Relationships | 3,034 |  |  | 13 |
Data and Databases | 579 |  |  | 10 |
Total | $ | 4,948 |  |  | 12 |
Black Knight revenues of $800 million and $264 million and operating expenses of $850 million and $287 million were recorded in our consolidated statement of income for the nine and three months ended September 30, 2024, respectively. Black Knight revenues are included in our mortgage technology revenues. The financial information in the table below combines the historical results for us and Black Knight for the nine and three months ended September 30, 2023, on a pro forma basis, as though the companies had been combined as of the beginning of the prior periods presented (in millions). The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented. Such unaudited pro forma financial information is based on the historical financial statements of ICE and Black Knight. This unaudited pro forma financial information is based on estimates and assumptions that have been made solely for purposes of developing such unaudited pro forma information, including, without limitation, purchase accounting adjustments, interest expense on debt incurred to finance the purchase price, acquisition-related transaction costs, the removal of historical Black Knight intangible asset amortization and the addition of intangible asset amortization related to this acquisition. The unaudited pro forma financial information does not reflect any synergies or operating cost reductions that have been and may be achieved from the combined operations.
| Nine Months Ended September 30, 2023 |  | Three Months Ended September 30, 2023
Total revenues, less transaction-based expenses | $ | 6,534 |  |  | $ | 2,190 |
Net income attributable to ICE | $ | 1,755 |  |  | $ | 474 |
Transaction-based expenses included within revenues, less transaction-based expenses in the table above were not impacted by pro forma adjustments and agree to the amounts presented historically in our consolidated statements of income as they relate solely to ICE and not to Black Knight.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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