What happened
Duck Creek Technologies (DCT) stood out this week even within the resurgent tech sector. That was hardly a surprise, as the company has signed a deal to go private in a lucrative buyout deal. News of the arrangement shot the share price well higher; Thursday evening, it was up a whopping 47% week-to-date, according to data compiled by S&P Global Market Intelligence.
So what
Duck Creek had quite the announcement to begin the week. On Monday, the company revealed that it had entered into an agreement to be purchased by Vista Equity Partners for $19 per share -- a 46% premium to its closing stock price the previous Friday (hence the corresponding movement upwards following the announcement).
The transaction will be effected entirely in cash, and is valued at roughly $2.6 billion.
Duck Creek specializes in technology specifically designed to meet the needs of the insurance industry. In the company's press release on the buyout, it quoted co-head of Vista's Flagship Fund Monti Saroya as saying that "Duck Creek's modern cloud architecture and demonstrated market traction position it to define the next generation of mission-critical technology," for property and casualty insurance.
Now what
After that sharp and sudden price spike in the wake of the announcement, several analysts were quick to adjust their recommendations on Duck Creek. Appropriately, most shifted these to the equivalent of hold, typically from their previous buys. William Blair, Stifel, and Needham & Company all went buy-to-hold on Monday, almost certainly due to the buyout (and the low probability of the shares rising much higher).
