Vista Equity Partners to acquire Duck Creek Technologies for $2.6bn

March 2023 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

March 2023 Issue

Private equity firm Vista Equity Partners has agreed to acquire insurance technology company Duck Creek Technologies in an all-cash deal worth $2.6bn.

Under the terms of the agreement, Duck Creek shareholders will receive $19 per share in cash for each share held, which represents a 46 percent premium to Duck Creek’s closing stock price on 6 January 2023, the last full trading day prior to the transaction announcement, and a premium of approximately 64 percent over the volume weighted average price of Duck Creek’s stock for the 30 days ending 6 January 2023.

Despite the premiums, the agreement still represents a big discount to the heights that Duck Creek had previously reached. The company went public in August 2020 at $27 a share, and at its high-water mark in February 2021, closed above $59 per share. However, Duck Creek saw its stock price fall about 60 percent in 2022.

The transaction is expected to close in the second quarter of 2023, subject to the satisfaction of customary closing conditions, including approval by Duck Creek’s stockholders and US antitrust clearance. Upon completion of the transaction, Duck Creek’s common stock will no longer be publicly listed, and Duck Creek will become a privately held company. Vista Equity Partners intends to finance the transaction with fully committed equity financing that is not subject to any financing condition.

The agreement also included a ‘go-shop’ period which expired on 7 February 2023, which allowed Duck Creek’s board of directors and its advisers to actively initiate, solicit and consider alternative acquisition proposals from third parties. Under the terms of the ‘go-shop’ period, Duck Creek’s board of directors had the right to terminate the merger agreement to enter into a superior proposal subject to the terms and conditions of the merger agreement.

“This transaction is a testament to the value of the Duck Creek platform, the success of our strategy and the strength of our incredible team,” said Michael Jackowski, chief executive of Duck Creek. “Following a deliberate and thoughtful process, the Board approved this transaction which delivers a great outcome for Duck Creek’s shareholders, providing them a certain and substantial cash value at an attractive premium. Duck Creek is proud to have pioneered cloud-based mission-critical systems for the P&C insurance industry to deliver a best-in-class customer experience. We are excited to enter the next chapter for Duck Creek in partnership with Vista Equity Partners to continue supporting P&C insurance carriers’ move to the cloud.”

“Duck Creek is playing an outsized role in accelerating cloud strategies and unlocking all the advantages they provide this crucial sector of today’s economy,” said Monti Saroya, senior managing director and co-head of Vista’s Flagship Fund. “Duck Creek’s modern cloud architecture and demonstrated market traction position it to define the next generation of mission-critical technology for P&C insurance.”

“Vista has an established track record of partnering with leading enterprise software businesses within the insurance industry and related verticals,” said Jeff Wilson, managing director at Vista. “We are excited to work with the Duck Creek team as we look to build on their best-in-class platform and solutions, which serve many of the world’s leading P&C insurance carriers.”

Duck Creek provides cloud-based property and casualty insurance solutions to its customers including Berkshire Hathaway Specialty Insurance and American International Group. The company released its fiscal first-quarter results in January, showing revenue of $80.6m and a net loss of $5.2m.

Prior to the announcement of its sale to Vista Equity, Duck Creek also announced a definitive agreement to acquire Imburse Payments, a Swiss-based modern payments platform. The deal is also expected to close during the second fiscal quarter of 2023.

Richard Summerfield