Vista to Take Duck Creek Technologies Private in $2.6B Deal

Duck Creek Technologies, which serves some of the biggest clients in the property and casualty sector, will be taken private by Vista Equity Partners in an all-cash deal valued at about $2.6 billion, the insurance tech firm said on Monday.

Private equity firms have lately ventured into the insurance sector to take advantage of defensive business models that do better in times of economic uncertainty in comparison to other financial sectors.

The deal for Duck Creek at a purchase price of $19 per share, represents a premium of 46% to Duck Creek’s last close.

Shares in the company, which lost roughly 60% of their value last year, were up nearly 47% at $19.06 in early trading after the deal was announced.

The deal terms include a “go-shop” period which expire on Feb. 7; until then the company’s board can solicit and consider alternate proposals.

“As one of the leading vertical software providers within the P&C insurance market, with attractive growth prospects and the potential for much higher margins at scale, we suspect other strategic and financial players will likely want to review the deal,” Peter Heckmann, analyst at brokerage D.A. Davidson said in a note.

Duck Creek provides cloud-based property and casualty insurance solutions to its customers including Berkshire Hathaway Specialty Insurance and American International Group.

Last week, the company said its revenue in the first-quarter ended Nov. 30, rose 10% to $80.6 million, helped by a 23% jump in subscription revenue.

Vista Equity is a global investment firm focused on enterprise software, data and technology-enabled businesses.

Duck Creek expects the deal to close in the second-quarter of this year. J.P. Morgan is acting as financial advisor to Duck Creek.

Last year, Blackstone Inc. had signed a partnership deal to manage certain investments for Resolution Life and has agreed to invest $500 million in the life insurance group.