Merger Arbitrage Mondays: Black Knight To Be Acquired By Intercontinental


  • Two of the three new deals announced last week were potential deals in the works.
  • Black Knight entered into a definitive agreement to be acquired by Intercontinental Exchange in a deal valued at $13.1 billion.
  • Welltower made a nearly $5 billion all-cash bid for Healthcare Realty Trust.
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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, Inc. (NYSE: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 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, Inc. (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.

According to the merger agreement, Black Knight will be charged a termination fee of $398 million if it terminates the agreement, and Intercontinental Exchange will be charged a termination fee of $725 million if it terminates the agreement.

SPAC Arbitrage

There was one new SPAC IPO filed and two new SPAC combinations announced last week. You can find the new SPAC IPO announcements in our SPACs tool here.

  1. On May 2, 2022, CH-AUTO TECHNOLOGY CORPORATION, an electric vehicle manufacturing and design service company based in China, and Mountain Crest Acquisition Corp. IV (MCAF) entered into a definitive merger agreement.
  2. On May 2, 2022, VCV Power Sigma and VCV Power Gamma, a U.S.-based Bitcoin mining business, and Fortune Rise Acquisition Corporation (FRLA) entered into a definitive merger agreement.


  1. On May 3, 2022, Goldenbridge Acquisition Limited (GBRG) terminated its previously announced agreement and plan of merger with AgiiPlus, by mutual agreement of all relevant parties.

Weekly Spread Changes

The table below shows weekly spread changes between April 29 and May 7, 2022.

Symbol Quote AcquiringCompany AcquiringCompany Quote CurrentSpread Last WeekSpread Spread ChangeWeekly DealType
(HTA) 29.84 Healthcare Realty Trust Incorporated (HR) 30.81 19.40% 4.73% 14.67% Cash Plus Stock
(TEN) 15.67 Apollo Global Management, Inc. (APO) 52.9 27.63% 16.48% 11.15% All Cash
(SAVE) 19.74 Frontier Group Holdings, Inc. (ULCC) 9.62 4.00% -5.03% 9.03% Cash Plus Stock
(MBII) 1.03 Bioceres Crop Solutions Corp. (BIOX) 13.47 15.08% 10.76% 4.32% All Stock
(VG) 19.37 Ericsson (ERIC) 7.71 8.42% 5.21% 3.21% All Cash
(XENT) 27.81 Medtronic plc (MDT) 103.45 1.58% 3.22% -1.64% All Cash
(TWTR) 49.8 Elon Musk (N/A) 8.84% 10.57% -1.73% All Cash
(NP) 37.37 Schweitzer-Mauduit International, Inc. (SWM) 25.93 -5.77% -3.48% -2.29% All Stock
(AZPN) 163.25 Emerson Electric Co. (EMR) 88.01 -1.99% 0.92% -2.91% Special Conditions
(ATVI) 77.84 Microsoft Corporation (MSFT) 274.73 22.05% 25.66% -3.61% All Cash

Deal Statistics:

Total Number of Deals Closed in 2022 66
Total Number of Deals Not Completed in 2022 4
Total Number of Pending Deals
Cash Deals 52
Stock Deals 10
Stock & Cash Deals 10
Special Conditions 8
Total Number of Pending Deals 80
Aggregate Deal Consideration $816.55 billion

New Deals:

  1. The acquisition of Nomad Royalty Company (NSR) by Sandstorm Gold (SAND) for $585.29 million in an all stock deal. Under the terms of the agreement, shareholders of Nomad will receive 1.21 common shares of Sandstorm for each Nomad Share held.
  2. The acquisition of Black Knight (BKI) by Intercontinental Exchange (ICE) for $16 billion or $85 per share. Black Knight shareholders can elect to receive either cash or stock, subject to proration, with the value of the cash election and the stock election equalized at closing. We added BKI as a potential deal to the Deals in the Works section on April 5, 2022, and the price after the news of the potential deal came out was $66.27.
  3. The acquisition of Silicon Motion Technology Corporation (SIMO) by MaxLinear (MXL) for $8 billion in a cash plus stock deal. Under the terms of the definitive agreement, the transaction consideration will consist of $93.54 in cash and 0.388 shares of MaxLinear stock for each Silicon Motion ADS (American Depositary Share) and $23.385 in cash and 0.097 shares of MaxLinear common stock for each Silicon Motion ordinary share not represented by an ADS. We added SIMO as a potential deal to the Deals in the Works section on April 24, 2022, and the price after the news of the potential deal came out was $87.02.

Deal Updates

  1. On May 2, 2022, II-VI Incorporated (IIVI) and Coherent (COHR) refiled their Premerger Notification and Report Form (the “HSR Notification”) with the Federal Trade Commission and the U.S. Department of Justice, in connection with the previously-announced pending acquisition of Coherent by II-VI.
  2. On May 2, 2022, The Board of Directors of Spirit Airlines (SAVE) unanimously determined that the unsolicited proposal received from JetBlue Airways (JBLU) does not constitute a 'Superior Proposal' as defined in Spirit's merger agreement with Frontier Group Holdings (ULCC).
  3. On May 3, 2022, The Wall Street Journal reported that Welltower (WELL) made a nearly $5 billion all-cash bid for Healthcare Realty Trust (HR) shortly after the smaller REIT agreed to merge with Healthcare Trust of America (HTA) earlier this year.
  4. On May 3, 2022, Tufin Software Technologies (TUFN) announced that the special meeting of stockholders will be on June 7, 2022.
  5. On May 3, 2022, Partners Bancorp (PTRS), reported net income attributable to the company of $2.1 million, or $0.12 per share, for the three months ended March 31, 2022, a $1.0 million or 93.5% increase when compared to net income attributable to the company of $1.1 million, or $0.06 per share, for the same period in 2021.
  6. On May 4, 2022, Neenah (NP) reported first quarter 2022 results. Record net sales of $284.8 million, were up 25 percent from the prior year, reflecting selling price actions to recover input costs and higher volume in both segments. Excluding the effects of the April 2021 Itasa acquisition and a facility closure, net sales were 12 percent higher.
  7. On May 4, 2022, Spirit Airlines (SAVE) reported first quarter 2022 financial results. For the first quarter 2022, Spirit Airlines reported a net loss of $194.7 million, or a net loss of $1.79 per diluted share.
  8. On May 5, 2022, Tenneco (TEN) announced results for the first quarter of 2022 ending on March 31, 2022. First quarter total revenue was $4.6 billion, down 2% year-over-year. The company reported net loss of $38 million, or a loss of $0.46 per diluted share, compared to net income of $65 million, or $0.79 per diluted share, in the prior year. Tenneco also reported that it is on-track to complete pending transaction with Apollo Funds in the second half of 2022.
  9. On May 5, 2022, Vonage Holdings (VG) announced results for the quarter ended March 31, 2022. The company reported a consolidated revenue of $359 million, an increase of 8% year-over-year.
  10. On May 5, 2022, Take-Two Interactive Software (TTWO), entered into the Second Amendment to the previously announced Agreement and Plan of Merger with Zynga (ZNGA). The parties currently anticipate that the closing of the combination will occur on May 23, 2022.
  11. On May 5, 2022, Black Knight (BKI) announced unaudited financial results for the first quarter of 2022. The company reported revenues of $387.2 million, an increase of 11% and organic revenue growth of 9%. Operating income of $80.2 million was an increase of 18% as compared to the prior year quarter.
  12. On May 7, 2022, Rogers Communications (RCI) and Shaw Communications (SJR) were notified the Commissioner of Competition’s intention to file applications to the Competition Tribunal opposing Rogers’ proposed merger with Shaw.

Closed Deals

  1. The acquisition of US Ecology (ECOL) by Republic Services (RSG) on May 2, 2022. It took 82 days for this deal to be completed.
  2. The acquisition of Huttig Building Products (HBP) by Woodgrain on May 3, 2022. It took 43 days for this deal to be completed.
  3. The acquisition of Golden Nugget Online Gaming (GNOG) by DraftKings (DKNG) on May 5, 2022. It took 269 days for this deal to be completed.
  4. The acquisition of 51job, Inc. (JOBS) by Garnet Faith Limited on May 6, 2022.

Top 10 deals with largest spreads

Please do your own due diligence on deals with large spreads. Some of these large spreads might be related to regulatory issues or because of the way the deal is structured. We classify some of these deals as "special situation" deals in our merger arbitrage tool and provide additional details to help with the analysis. There may be unique situations related to special dividends, spinoffs, proration, etc. that need to be accounted for when looking at these spreads.

Symbol AnnouncedDate AcquiringCompany ClosingPrice LastPrice ClosingDate Profit AnnualizedProfit
(TEN) 02/23/2022 Apollo Global Management, Inc. (APO) $20.00 $15.67 12/31/2022 27.63% 42.56%
(BLCT) 04/30/2022 Multelements Limited (N/A) $1.60 $1.29 12/31/2022 24.03% 37.01%
(ATVI) 01/18/2022 Microsoft Corporation (MSFT) $95.00 $77.84 06/30/2023 22.05% 19.25%
(ZNGA) 01/10/2022 Take-Two Interactive Software, Inc. (TTWO) $9.86 $8.08 06/30/2022 22.03% 151.71%
(BKI) 05/04/2022 Intercontinental Exchange, Inc. (ICE) $85.00 $70.91 06/30/2023 19.87% 17.35%
(HTA) 02/28/2022 Healthcare Realty Trust Incorporated (HR) $35.63 $29.84 09/30/2022 19.40% 48.84%
(SIMO) 05/05/2022 MaxLinear, Inc. (MXL) $110.33 $92.68 06/30/2023 19.04% 16.63%
(CHNG) 01/06/2021 UnitedHealth Group Incorporated (UNH) $27.75 $23.47 12/31/2022 18.24% 28.09%
(MBII) 03/16/2022 Bioceres Crop Solutions Corp. (BIOX) $1.19 $1.03 09/30/2022 15.08% 37.97%
(MILE) 11/08/2021 Lemonade (LMND) $1.12 $0.98 06/30/2022 14.06% 96.80%


SPAC activity dwindled again last week with only one SPAC IPO filed. Companies continued filing their first quarter earnings, and we can see a change in the spreads for some of the active deals. There was a significant change in the spread for the Healthcare Trust of America (HTA) deal last week, after Healthcare Realty Trust (HR), the company acquiring HTA received a $5 billion bid from Welltower (WELL).

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This article was written by

Asif Suria profile picture
Comprehensive tools and detailed analysis for event-driven investors

I am an entrepreneur and investor with a focus on event driven strategies including merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. I was one of the earliest contributors on Seeking Alpha and started publishing here in 2005. For more than a decade I have been writing every week about M&A and interesting insider transactions. My work has been mentioned in Barron's, Dow Jones, BNN Bloomberg and other publications.  

I have been an active investor for more than two decades and my background in technology has helped me built tools that inform my investing process, especially as it relates to event-driven strategies that require updated data and processes. The focus on my Inside Arbitrage service is to provide investors with the right combination of tools and analysis to help them take advantage of strategies that can perform well across market cycles.  


Disclosure: I/we have a beneficial long position in the shares of TWTR, FHN, TSEM, HTA, TGNA, BRG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: I have long positions in Twitter (TWTR), First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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