NYSE Parent To Acquire Mortgage-Software Maker Ellie Mae For $11B

Intercontinental Exchange Inc ICE announced Thursday it was purchasing mortgage-software company Ellie Mae from private-equity firm Thoma Bravo.

What Happened

The transaction is valued at $11 billion, including about $9.24 billion in cash and $1.76 billion in stock. The agreement is expected to close in the third or early fourth quarter this year, Intercontinental Exchange said in a statement. 

The New York Stock Exchange parent's CEO Jeffrey Sprecher said the acquisiton would "enhance ICE’s growth strategy in mortgage technology."

The exchange operator’s executives justified the high price tag attached to the purchase in a conference call discussing the deal, saying, they expected Ellie Mae’s business to keep growing over the next decade, the Wall Street Journal reported.

Sprecher said that the company stands to profit as it will receive large amounts of mortgage data, which it can sell. He added that the market operator would be the “facto source of information for the U.S. mortgage market.”

Why It Matters

Thoma Bravo purchased Ellie Mac for $3.7 billion in February last year, and the software company's business has seen a rapid growth since the novel coronavirus (COVID-19) outbreak the Journal noted.  Mortgage Bankers Association estimates mortgage originations will reach their highest level since 2005 this year, as low interest-rates drive refinancings.

Last year, Intercontinental Exchange purchased Simplifile, LC, a large network that underpins real estate constituents for $335 million. 

The exchange operator said it invested a total of $11.5 billion as a part of its strategy to automate mortgage workflow by acquiring Simplifile, Ellie Mae and the 2018 acquisition of the parent of Mortgage Electronic Registrations Systems.

Price Action 

ICE shares declined 3.14% to $94.40  in the after-hours session Thursday, after closing the regular session at $97.46.

Photo courtesy: Financial Times via Wikimedia