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  • Writer's pictureChesapeake Group

Intercontinental Exchange to acquire Ellie Mae


On August 06, 2020 intercontinental Exchange entered into a definitive agreement to acquire Ellie Mae, the leading cloud-based platform provider for the mortgage finance industry. The deal with Ellie Mae, a portfolio company of Thoma Bravo, values the company at $11.0bn.

The transaction will be funded by a combination of cash (84%) and newly issued shares of Intercontinental Exchange common stock (16%). The acquisition is expected to be accretive to adjusted EPS of Intercontinental Exchange in the first year of full ownership.

About Intercontinental Exchange:

Founded in 2000, Intercontinental Exchange serves customers by operating the exchanges, clearing houses and information services they rely upon to invest, trade and manage risk across global financial and commodity markets.

As a leader in market data, the company serves the information and connectivity needs across virtually all asset classes.

The company has primarily achieved growth through acquisitions of other exchanges. The company is headquartered in Atlanta, GA.

About Ellie Mae:

Founded in 1997, Ellie Mae is the leading cloud-based platform provider for the mortgage finance industry.

Ellie Mae’s technology solutions enable lenders to originate more loans, lower origination costs, and reduce the time to close, all while ensuring the highest levels of compliance, quality and efficiency.

It is headquartered in Pleasanton, CA and employs around 1,700 people.

Transaction Rationale:

The deal following Intercontinental Exchange’s prior acquisitions of MERS and Simplifile, establishes Intercontinental as the leading provider of end-to-end electronic workflow solutions serving the evolving US residential mortgage industry.

“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.” said Jeffrey C. Sprecher, Founder, Chairman and CEO of Intercontinental Exchange.

Financial terms:

Thoma Bravo has generated a money multiple of 3.0x in 16 months as it had acquired Ellie Mae in Feb-19 for $3.7bn.

The expected IRR for Intercontinental Exchange is 10% with run-rate cost synergies of $50m-$65m by the end of year three.

The transaction values Ellie Mae at $11,019m which represents an EV / sales multiple of 12.2x. Ellie Mae is expected to generate $900m in sales in 2020.

Including past acquisitions of MERS and Simplifile, Intercontinental Exchange will have invested $11.5bn in its strategy to automate the mortgage workflow.

The deal is expected to close in third quarter or early fourth quarter of 2020 and is subject to the receipt of regulatory approvals and satisfaction of customary closing conditions.

The Chesapeake Group was not advisor to either party in this transaction


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