Acquisitions and Divestitures

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Ellie Mae Acquisition

On September 4, 2020, we acquired Ellie Mae, Inc., or Ellie Mae, for aggregate consideration of $11.4 billion from private equity firm Thoma Bravo. The purchase price consisted of $9.5 billion in cash, as adjusted for $335 million of cash and cash equivalents held by Ellie Mae on the date of acquisition, and approximately $1.9 billion, or approximately 18.4 million shares of our common stock, based on our stock price on the acquisition date. ICE funded the cash portion of the purchase price with net proceeds from our offering of senior notes in August 2020, together with the issuance of commercial paper and borrowings under a senior unsecured term loan facility. We have evaluated the impact of this acquisition and related disclosures under Accounting Standards Codification, or ASC, 805- Business Combinations.

The purchase price has been allocated to the net tangible and identifiable intangible assets and liabilities based on the preliminary respective estimated fair values on the date of acquisition, as determined with the assistance of a third-party valuation specialist. The excess of purchase price over the net tangible and identifiable intangible assets has been recorded as goodwill. Goodwill represents potential revenue synergies related to new product development, various expense synergies and opportunities to enter new markets. The preliminary purchase price allocation is as follows (in millions):


	Preliminary Purchase Price Allocation
Cash and cash equivalents	$	335
Property and equipment	127
Goodwill	7,726
Identifiable intangibles	4,442
Other assets and liabilities, net	51
Deferred tax liabilities on identifiable intangibles	(1,253)
Total preliminary purchase price allocation	$	11,428

In performing the preliminary purchase price allocation, we considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of the Ellie Mae business. We have not yet obtained all of the information related to the fair value of the acquired assets and liabilities.

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to income taxes and certain other tangible assets and liabilities. The allocation of the purchase price will be finalized upon the completion of the analysis of the acquired assets and liabilities within one year of the date of acquisition.

The following table sets forth the components of the preliminary intangible assets associated with the acquisition as of June 30, 2021 (in millions, except years):


	Acquisition-Date Preliminary Fair Value		Accumulated Amortization		Net Book Value		Useful Life (Years)
Customer relationships	$	3,136	$	(133)	$	3,003	10 to 20
Backlog	300		(49)		251		5
Trademark/Tradenames	200		(9)		191		5 to 20
Developed Technology	739		(89)		650		7
In-process Research & Development	67		—		67		N/A
Total	$	4,442	$	(280)	$	4,162

The financial information in the table below summarizes the combined results of operations of ICE and Ellie Mae, on a pro forma basis, as though the companies had been combined as of the beginning of the period presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the period presented. Such unaudited pro forma financial information is based on the historical financial statements of ICE and Ellie Mae. This unaudited pro forma financial information is based on estimates and assumptions that have been made solely for purposes of developing such unaudited pro forma information, including, without limitation, purchase accounting adjustments, interest expense on debt issued to finance the purchase price, acquisition-related transaction costs, the removal of historical Ellie Mae intangible asset amortization and the addition of intangible asset amortization related to this acquisition. The unaudited pro forma financial information does not reflect any synergies or operating cost reductions that have been and may be achieved from the combined operations. The unaudited pro forma financial information combines the historical results for us and Ellie Mae for the six months and three months ended June 30, 2020 in the following table (in millions).


	Six Months Ended June 30, 2020		Three Months Ended June 30, 2020
Total revenues, less transaction-based expenses	$	3,362	$	1,629


Net income attributable to ICE	$	1,141	$	533

Transaction-based expenses included within revenues, less transaction-based expenses in the table above, were not impacted by pro forma adjustments and agree to the amounts presented historically in our consolidated income statements as they relate solely to ICE and not to Ellie Mae.

Bakkt Transaction

On January 11, 2021, we announced that Bakkt Holdings, LLC, or Bakkt, had entered into a definitive agreement to combine with VPC Impact Acquisition Holdings, or VIH, a special purpose acquisition company sponsored by Victory Park Capital, or VPC.

The business combination between Bakkt and VIH is expected to result in over $500 million of cash on the combined company’s balance sheet, reflecting a contribution of up to $207 million of cash held in VIH’s trust account, and a $325 million concurrent private placement, or PIPE, of Class A common stock of the combined company, priced at $10.00 per share, including a $50 million commitment from us. The newly combined company will be renamed Bakkt Holdings, Inc. and is expected to be listed on the New York Stock Exchange, or NYSE.

As part of the transaction, Bakkt’s existing equity holders and management will roll 100% of their equity into the combined company. Assuming no shareholders of VIH exercise their redemption rights, current Bakkt equity holders, including ICE, will own approximately 78% of the combined company, VIH’s public shareholders will own approximately 8%, VPC will own 2%, and PIPE investors (a group that will also include us) will own approximately 12% of the issued and outstanding common stock of the combined company at closing.

Following completion of the business combination, which is expected to occur during the third quarter of 2021, we are expected to have a 65% economic interest and a minority voting interest in the combined company. Prior to the closing, Bakkt revenues and operating expenses continue to be reported within our consolidated revenues and operating expenses. Following the closing, we will have a minority voting interest in the combined company and as a consequence, we expect to deconsolidate Bakkt and treat it as an equity method investment within our financial statements. As of June 30, 2021, we continue to fully consolidate Bakkt and have not applied accounting treatment under the "held for sale" guidance due to conditional regulatory and shareholder approvals.