Intercontinental Exchange in US$11bn purchase

Intercontinental Exchange

Intercontinental Exchange, which owns the New York Stock Exchange, has struck the largest deal in its 20-year history, spending US$11 billion on Ellie Mae, the cloud-based platform provider that processes 35% of mortgage applications in the US.

The cash-and-shares purchase from private equity group Thoma Bravo by the Atlanta-based Intercontinental Exchange, which is a US$52 billion financial markets juggernaut running some of the world’s biggest exchanges, clearing houses and index providers, shows Intercontinental Exchange’s intent to modernise the US mortgage data market.

The deal represents a significant premium to Ellie Mae’s US$3.7 billion valuation when Thoma Bravo acquired the business in an all-cash transaction last year, Ellie Mae said in a press release.

As part of the deal, Thoma Bravo will receive 16% of the price in newly issued Intercontinental Exchange shares, with the remainder of the transaction paid in cash, businesswire reported

Ellie Mae, based in Pleasanton, California, employs about 1,700 workers. It was founded in 1997 with a mission to automate and digitise the trillion-dollar residential mortgage industry. Through its Digital Lending Platform, Ellie Mae provides technology services to all participants in the mortgage supply chain, including its over 3,000 customers and thousands of partners and investors participating on their open network who provide liquidity to the market. Lenders rely on Ellie Mae to securely manage and facilitate the exchange of data across the ecosystem to enable the origination of mortgages while maintaining strict adherence to various local, state and federal compliance requirements.

“Twenty years after we founded Intercontinental Exchange to provide a transparent trading platform for the energy industry, and following two decades of providing continued innovation to help customers navigate global markets, we are pleased to announce the acquisition of Ellie Mae, which will help us similarly transform the mortgage marketplace,” said Jeffrey C. Sprecher, Founder, Chairman and CEO of Intercontinental Exchange. “Our planned acquisition represents a one-of-a-kind opportunity to add an extraordinary enterprise with great leadership to our family. It will also enhance ICE’s growth strategy in mortgage technology, with complementary products and a wide array of customers and stakeholders who will benefit from our core and proven expertise in operating networks and marketplaces.”

Jonathan Corr, President and CEO of Ellie Mae said: “We are excited to be joining the Intercontinental Exchange family and having the opportunity to work closely with Simplifile and MERS in helping our industry to realise the true digital mortgage.”

“We have been on a journey, as we have long said, ‘to automate everything automatable’ for the mortgage industry, and joining ICE, which has followed a parallel journey in global exchanges, will allow us to further accelerate realising our vision. We also greatly appreciate, and have significantly benefited from, the operational and strategic support from Thoma Bravo. They were instrumental in helping us achieve this outcome, which is a great one for our customers and the industry in general.”

Intercontinental Exchange’s deal is the latest mega merger and acquisition in the US since the beginning of the northern hemisphere summer after the initial phase of the coronavirus pandemic had brought acquisitions to a stop, Financial Times reported

Fuelled by cheap cash and a robust equity market, companies are seizing the moment to execute large deals. This week Seven & i Holdings bought Speedway petrol stations for US$21 billion, virtual care company Teladoc Health acquired rival Livongo for US$18.5 billion and Blackstone took over in a deal worth US$4.7 billion.

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