Tyler Technologies to acquire NIC for $2.3bn

April 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

April 2021 Issue

Strengthening its ability to provide end-to-end solutions to local, state and federal governments, software company Tyler Technologies has acquired government solutions and payments firm NIC in an all-cash transaction valued at approximately $2.3bn.

Under the terms of the definitive agreement, NIC stockholders will receive $34 per share in cash, a premium which was unanimously approved by the boards of directors of both companies.

Tyler plans to fund the transaction with a combination of approximately $700m of cash on Tyler’s balance sheet and new debt. Tyler has obtained financing commitments for a $1.6bn bridge facility and expects to replace the bridge facility with permanent financing prior to closing.

“The coronavirus (COVID-19) pandemic has accelerated the shift by governments to online services and electronic payments as more citizens and businesses are interacting digitally with government,” said Lynn Moore, president and chief executive of Tyler. “NIC is uniquely positioned with its deep expertise and robust digital solutions to partner with us in making government more efficient and more accessible to citizens.”

A leading digital government solutions and payments company, NIC serves more than 7100 federal, state and local government agencies across the nation. Headquartered in Olathe, Kansas, the company delivers user-friendly digital services that make it easier and more efficient for citizens and businesses to interact with government – providing valuable conveniences like applying for unemployment insurance, submitting business filings, renewing licences, accessing information, and making secure payments without visiting a government office.

Highly complementary in their strengths, the combined company expects to significantly expand its business with federal agencies and leverage Tyler’s sales channels and client base to enhance NIC’s scale and accelerate its strategy of bringing vertical applications to clients. In addition, Tyler expects NIC to continue to manage its operations from its home office in Kansas, and to retain its employees and leadership team.

“This announcement marks an exciting next chapter in our 30-year history, and one that we believe will create significant value for our government partners, employees and stockholders,” said Harry Herington, chief executive and chairman at NIC. “The combined vision, strength and resources of our companies will accelerate our collective ability to provide innovative, efficient, transparent services to local, state and federal governments. With this transaction, we are pleased to be able to deliver immediate, premium cash value to our stockholders and we look forward to NIC’s continued success as part of Tyler.”

Serving as exclusive financial adviser to Tyler is Goldman Sachs & Co. LLC. Munck Wilson Mandala LLP is serving as legal counsel. Cowen and Company LLC is serving as exclusive financial adviser to NIC, with Shearman & Sterling LLP serving as legal counsel.

The transaction is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by NIC’s stockholders, and is expected to close in the second quarter of 2021.

Ms Moore concluded: “Our companies share a vision for thriving, connected communities, and our cultures are extremely compatible. The combination will provide extensive benefits for the clients, employees, and shareholders of both companies.”

Fraser Tennant