Duck Creek Technologies, which serves some of the biggest real estate and casualty insurance clients, will be taken over by Vista Equity Partners in a private deal worth about $2.6 billion, the insurance technology company said on Monday.
Private equity firms have recently ventured into the insurance sector to take advantage of defensive business models that perform better in times of economic uncertainty than other financial sectors.
The Duck Creek deal at $19/share represents a 46% premium to Duck Creek’s last close.
Shares of the company, which lost about 60% of their value last year, rose almost 47% to $19.06 in early trading after the deal was announced.
The terms of the deal include a “move to store” period that ends February 7; until then, the board of the company may request and consider alternative proposals.
“As one of the leading vertical software vendors in the P&C insurance market, with attractive growth prospects and the potential for much higher margins at scale, we suspect that other strategic and financial players are likely to want to reconsider the deal.” — Peter Heckmann, Analyst the brokerage DA Davidson says in a note.
Duck Creek provides cloud-based property and casualty insurance solutions to clients including Berkshire Hathaway Specialty Insurance and American International Group.
The company said last week that its revenue in the first quarter ended Nov. 30 rose 10% to $80.6 million, helped by a 23% increase in subscription revenue.
Vista Equity is a global investment company specializing in enterprise software, data and technology.
Duck Creek expects the deal to close in the second quarter of this year. JP Morgan is acting as financial advisor to Duck Creek.
Last year, Blackstone Inc.. signed a partnership agreement to manage certain investments for Resolution Life and agreed to invest $500 million in a life insurance group.
Do you want to be in the know?
Get the latest insurance news
sent directly to your inbox.