Black Knight to Acquire Optimal Blue to Expand Its Origination Offerings

Cannae Holdings, Inc. and Thomas H. Lee Partners, L.P. Will Invest in a Newly Formed Entity

Black Knight, Inc., a leading provider of integrated software, data and analytics to the mortgage and real estate industries, announced it has entered into a definitive equity purchase agreement with affiliates of private equity firm GTCR, LLC, to purchase Optimal Blue, a leading provider of secondary market solutions and actionable data services, for an enterprise value of $1.8 billion, subject to customary purchase price adjustments.

In connection with the acquisition, Black Knight will combine its Compass Analytics business with Optimal Blue in a newly formed entity with minority co-investors Cannae Holdings, Inc. and Thomas H. Lee Partners, L.P. . Black Knight will own approximately 60% of the new entity.

“Optimal Blue is a business that we have respected for many years. By bringing Optimal Blue into the Black Knight family, we will be adding industry-leading product, pricing and eligibility (PPE) capabilities to our already robust set of solutions and enhancing our already comprehensive data and analytics capabilities,” said Anthony Jabbour, CEO of Black Knight. “In addition to Optimal Blue’s high-quality and passionate management team, we are pleased and honored to be partnering with two experienced and successful investors in Cannae and THL, both of which we have known and respected for a long time and are confident will provide meaningful value-add.”

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“Optimal Blue and Black Knight share similar strategies for innovation, integration and client focus, as well as a similar culture, which is key to successfully integrating premier companies,” said Scott Happ, CEO of Optimal Blue. “We are excited about the opportunity to be part of Black Knight where there is such a great strategic fit, strong client base and so many opportunities to deliver innovative solutions that will add value to our clients.”

Jabbour added, “We also share similar business models, which include subscription-based recurring revenues and significant operating leverage. We believe Optimal Blue will be accretive to our key financial metrics and will create significant value for our shareholders. Combining the strengths of Black Knight and Optimal Blue will give clients of both companies additional offerings from a single provider and will significantly expand Black Knight’s opportunities to cross-sell our comprehensive solutions.”

Overview of Offerings

Optimal Blue offers the mortgage industry’s leading marketplace platform. Optimal Blue’s offerings include its PPE engine; comprehensive secondary services, such as pipeline management; valuable origination-specific data and analytics and an industry leading loan-trading platform, among other technologies that support efficiency and regulatory compliance in the origination process.

The Optimal Blue network includes approximately 1,000 originators and 185 investors that use Optimal Blue’s industry-leading PPE engine, and more than 3,500 industry participants, in total, including brokers and service providers. The PPE engine produces more than 240 million pricing quotes per year, representing approximately 35% of all mortgages with locked interest rates nationwide. This powerful platform streamlines the origination process for lenders by aggregating pricing and product guidelines from investors so lenders can efficiently price and originate mortgage products that can be sold on the secondary market. The PPE engine enables investors to systematically retrieve and publish interest rates through automated workflow to its network of mortgage industry participants, driving significant efficiencies for a large portion of the industry.

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Optimal Blue also provides mortgage market participants accurate, granular and timely insights into pricing, enterprise data, competitive positioning and industry trends, so they can validate strategies and maximize revenues.

Optimal Blue’s Resitrader^® is an online loan trading platform delivered in a secure, cloud-based platform that connects investors to a large base of sellers. By adding Black Knight’s comprehensive origination and servicing data assets to the Resitrader^® loan trading platform, Black Knight will be able to deliver the ability to buy and sell new and seasoned l**** via this platform. As the leading provider of servicing software to the mortgage industry, this powerful combination will further streamline the sale of l**** between Black Knight’s servicing clients, as well as those not currently using Black Knight’s MSP servicing software.

Strategic and Financial Benefits

• Adds market-leading products to Black Knight’s comprehensive offerings, augmenting Black Knight’s already strong origination software franchise
• Provides significant cross-selling opportunities
• Adds strong management team with significant industry expertise
• Similar business models featuring subscription-based recurring revenues
• Highly accretive to both growth and profitability financial metrics

Transaction Details

The transaction is subject to regulatory approval and satisfaction of other customary closing conditions. Closing of the transaction is currently expected to occur in the third quarter of 2020.

The acquisition is being funded with cash on hand, debt financing, and equity contributions from Cannae and THL.

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