Antitrust scrutiny of Intercontinental Exchange Inc.’s proposed acquisition of Jacksonville-based Black Knight Inc. has reached the U.S. Congress.
House Committee on Financial Services Chairwoman Maxine Waters expressed her concerns about the deal in a Dec. 21 letter to the Federal Trade Commission.
“This deal requires careful scrutiny to ensure consumers, the mortgage market, and the U.S. housing system overall are not harmed by the consolidation of the two largest players in the mortgage technology market,” the California Democrat said in her letter.
“In particular, we are concerned about the negative outcomes that may be passed on to consumers, such as higher prices, if such consolidation were to lead to decreased competition,” she said.
New York-based ICE agreed in May to acquire Black Knight.
The financial technology company is best known as the operator of the New York Stock Exchange but its businesses include a mortgage technology division that dominates the market for loan origination software.
Black Knight dominates the market for servicing mortgage loans already originated, providing processing for almost two-thirds of all U.S. first mortgage loans.
Black Knight has a smaller loan origination technology platform but Waters said in her letter the company accounts for 10% to 15% of that market. Combining it with ICE’s 50% share would give ICE nearly two-thirds of it.
“If this deal closed as proposed, the resulting conglomerate could exert significant market power over loan pricing for consumers, access to and sale of consumer data, and mortgage software pricing,” she said.
“Moreover, a combined ICE and Black Knight could harm small lenders that rely on vendors for their technology needs by significantly disincentivizing responsible innovation and inhibiting vendor competition given the dominant market share of ICE.”
In his most recent comments on the merger, ICE Chief Executive Jeffrey Sprecher said in the company’s third-quarter conference call in November that the merger will lead to lower loan origination costs.
“ICE has been at the forefront of building a mortgage platform so that industry participants can better communicate with one another, reduce their costs, pass these savings on to consumers in the form of better prices and appropriately implement the government’s homeownership policies,” he said, according to a company transcript of the call.
Sprecher said other potential acquirers don’t have the same resources to meet ICE’s planned investment in Black Knight’s technology to make it more efficient.
Black Knight shareholders approved the deal in September but the merger has a long way to go before approval as the FTC reviews the deal.
The companies are hoping to complete the deal in mid-2023.
Although the deal is months from completion, Black Knight disclosed in a Dec. 23 Securities and Exchange Commission filing it is paying Executive Chairman Anthony Jabbour a $40 million bonus tied to the merger.
The filing said Jabbour’s employment agreement called for a discretionary bonus if the company was sold and the compensation committee of the board of directors determined the amount should be $40 million.
The company agreed to pay the bonus by Dec. 28 for tax-planning reasons. The filing said if Jabbour leaves the company without a good reason before the merger or if the deal is terminated, he would have to pay back the after-tax proceeds of the bonus.
Black Knight’s annual proxy statement said Jabbour’s total 2021 compensation was about $11.6 million. Jabbour was CEO of Black Knight but the company announced in February 2022 he would move into the role of executive chairman.
SG Blocks Inc., which has described itself as a safe and green company, changed its name to Safe & Green Holdings Corp.
The company also said it is spinning off its real estate development subsidiary into a separate public company.
Safe & Green Holdings, a modular building company that converts shipping containers for structures, moved its headquarters to Jacksonville in early 2022.
“We are thrilled to continue the story of SG Blocks under a new banner that more accurately reflects the evolution of the company throughout the years,” CEO Paul Galvin said in a Dec. 22 news release.
Safe & Green trades in the Nasdaq market under the same ticker symbol, “SGBX.”
The company’s real estate unit was renamed Safe and Green Development Corp. The holding company intends to spin off 30% of that company to its shareholders.
“As an independent entity, we expect Safe and Green Development Corporation will be able to streamline strategic decisions and focus on the needs of the commercial and residential real estate market. Standing on its own, the company will be well positioned to better serve customers and provide greater value to shareholders,” Galvin said in a Dec. 23 news release about the spinoff.
SG Blocks reported revenue of $20.3 million in the first nine months of 2022 but the company did not break out revenue for just the real estate development unit.
GEE Group Inc. reported flat revenue and a small net loss in its fourth quarter ended Sept. 30.
However, the Jacksonville-based staffing company reported higher revenue and earnings for the full fiscal year.
Revenue rose 11% to $165.1 million and adjusted earnings rose to $7.7 million, or 7 cents a share, compared with $1.9 million, or 3 cents a share, in fiscal 2021.
Chief Financial Officer Kim Thorpe said in the company’s Dec. 21 conference call that demand increased for professional staffing services as the negative effects of the coronavirus pandemic lessened.
“In addition, the volatility experienced in the U.S. economy and workforce in 2022 created many opportunities and increased demand, particularly in the direct hire placement services market,” he said, according to a company transcript of the call.
CEO Derek Dewan said GEE Group has had five straight quarters of improved results since reducing the company’s debt.
“Despite macroeconomic challenges or unforeseen events, we believe we can continue to produce solid results in fiscal year 2023 and beyond,” he said.
Despite a strong performance for the company, Barclays analyst Mark DeVries rated F&G Annuities & Life Inc. at “equal weight” after its spinoff from Jacksonville-based Fidelity National Financial Inc.
“The company has outperformed the initial expectations and has rapidly evolved into a multi-product, multi-channel insurer, yet we see limited upside potential from current levels and initiate at EW,” DeVries said in his Dec. 19 initiation report on F&G.
Title insurance company Fidelity decided to spin off 15% of F&G to shareholders to try and unlock the value of the business.
“Since F&G was acquired by FNF in 2020, the company has evolved from primarily one product sold out of a single distribution channel to a well-diversified insurance company selling five different products from five distribution channels,” DeVries said.
“Nevertheless, despite an improved growth profile and financial strength since selling to FNF, we believe F&G’s limited float with little prospect of an increase in the float prior to the five-year anniversary of FNF’s acquisition of F&G will limit further upside to the multiple,” he said.
F&G has been trading mainly between about $19 and $20 since it began trading Dec. 1 on the New York Stock Exchange.