Merger activity decreased last week with three new deals announced and four deals completed. Two of the three deals announced were potential deals in the works. We saw yet another SPAC business combination fall apart.
Black Knight (BKI)
Founded in 2013 and headquartered in Jacksonville, Florida, Black Knight provides innovative, high-performance software, data and analytics for mortgage and home equity lending and servicing to the mortgage industry. Solutions offered by the company include Loan Origination System, Loan Servicing System, Secondary Marketing Automation and Data and Analytics Marketplace. Mortgage Monitor and Originations Market Monitor are monthly benchmark data reports published by Black Knight.
We added Black Knight as a potential deal in the works on on April 5, 2022, when Bloomberg reported that the company was exploring a potential sale after receiving takeover interest. BKI’s price after this announcement was $66.27. On May 4, 2022, the company entered into a definitive agreement to be acquired by Intercontinental Exchange (ICE) in a deal valued at $13.1 billion. Investors can choose to receive the $85 per share consideration in cash (80%) or stock (20%) subject to proration, with the value of the cash election and the stock election equalized at closing.
ICE and Black Knight both offer loan origination software to mortgage lenders. According to Raymond James analyst Patrick O’Shaughnessy, this deal could potentially into antitrust issues as ICE’s Ellie Mae Encompass platform is the largest provider of loan origination software and Black Knight’s Empower is the “clear #2,”. The current spread on the deal is 19.87% and we are treating it as a “special conditions” deal worth $85 per share.