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January 30, 2024
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2023 market - Kick start with : Acquisition.
In Brief:
- Acquisition definition and its benefit.
- CinCor Pharma to be acquired by AstraZeneca $1.8B.
- Duck Creek to be acquired by Vista Equity Partners $2.6B
What is Acquisition?
As the name implies, purchasing shares of another company is where one company attempts to gain control of that company by purchasing most or all of its shares. When an acquirer purchases more than 50% of the stock and other assets of a target company, the acquirer will be able to make decisions regarding the assets without having to seek approval from the other shareholders of the target company.
Basically, for case in point, Company A acquires Company B, and the two companies continue to operate as an existing entity, Company A.
So, is company acquisition a good thing?
An acquisition can provide company with a quick boost in its market share and allow the business to speed up its growth process. In spite of the fact that competition can be challenging, growth through acquisition can be beneficial when it comes to gaining a competitive edge in the market. This process helps to achieve synergies between the companies and the market.
AstraZeneca starts 2023 with a $1.8 billion cardiovascular acquisition.
AstraZeneca (AZN) announced on January 9, 2023, its plans to acquire US-based biopharmaceutical company CinCor in a $1.8 billion deal, signaling the company’s interest to strengthen its cardiorenal pipeline. Last August, CinCor Pharma raised $258.7 million dollars in a public offering of common stock and pre-funded warrants, and. the deal with AstraZeneca now signals the company’s growth strategy.
Acquisition to access global rights to baxdrostat, a novel aldosterone synthase inhibitor being developed for the treatment of high blood pressure. The acquisition will allow access of global rights to baxdrostat, a novel aldosterone synthase inhibitor in development for blood pressure lowering.
“We are excited about the proposed acquisition of CinCor Pharma by AstraZeneca as we believe it offers the prospect of accelerating the development timeline and expanding the breadth of benefits patients with cardiorenal diseases might obtain from baxdrostat, if approved”. – said CinCor’s CEO Marc de Gadriel.
In this deal, AstraZeneca will be paying an upfront payment of $1.3 billion, which, in combination with the maximum possible contingent payments, would amount to $1.8 billion, as per the release. Once the deal is completed, CinCor’s baxdrostat will join AstraZeneca’s cardiovascular, renal and metabolic pipeline, comprising more than 20 drugs.
CinCor’s acquisition is just one of many moves being made by AstraZeneca to diversify its cardiovascular portfolio. According to GlobalData, the company prioritized cardiovascular deals between 2018 and 2022, completing six deals totaling $40 billion.
AstraZeneca’s CEO Pascal Soriot highlighted, “Our focus is mostly on small to mid-sized bolt-on acquisitions, so products or companies we can integrate in AstraZeneca and add value to.”
AstraZeneca share price after the news
AstraZeneca’s share price increased by 2.8% after the announcement. The company had been on a strong buy alert by many analysts with its targetted price of $76 with a $60-$105 range. This positive progression will not dim anytime soon due to a new acquisition.
Duck Creek is to be acquired by Vista Equity Partners for $2.6B
Media : Duck Creek’s Website.
Duck Creek Technologies (DCT), the in-intelligence solutions provider for the insurance industry (defining the future of property and casualty (P&C) insurance) will be acquired by Vista Equity Partners, a leading global investment firm focused exclusively on enterprise software, data, and technology-enabled businesses for $19 per share in an all-cash transaction valued at approximately $2.6 billion.
“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”. said Michael Jackowski, Chief Executive Officer of Duck Creek.
Designed to help insurers manage the entire claim lifecycle, Duck Creek Claims is an integrated claims management solution.
“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.” –said Monti Saroya, Senior Managing Director and Co-Head of Vista’s Flagship Fund.
A premium of 46% over Duck Creek’s closing stock price on January 6, 2023, the last full trading day prior to the transaction announcement, as well as a premium of approximately 64% over Duck Creek’s volume weighted average price for the 30-day period ending January 6, 2023.
As long as the customary closing conditions are met, the transaction is expected to close during the second calendar quarter of 2023, subject to the satisfaction of certain conditions. Following the completion of the transaction, Duck Creek will become a privately owned company after the closing of the deal.
Bottom Line
In spite of the fact that most organizations grow organically from the ground up, some company can accelerate their growth through the use of acquisitions. There is no shortage of potential acquisition targets, but success requires a thorough, disciplined and patient acquisition strategy.
Acquisitions can only succeed if a disciplined approach is developed, based on both short- and long-term value drivers. Acquisitions, however, can help companies maximize their growth opportunities and emerge as high performers.
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