Shares of NIC Inc. (EGOV), a digital service provider for government agencies, jumped by more than 15% Wednesday morning after the company announced that it would be acquired by Tyler Technologies (TYL 0.23%). Shares of Tyler were also trading more than 7% higher on the news.
Under the terms of the deal, Tyler Technologies, the largest software provider to the U.S. public sector, will buy NIC in an all-cash deal for $2.3 billion, or $34 per share. That represents a premium of roughly 22% over NIC's 30-day weighted trading average.
NIC currently serves more than 7,100 federal, state, and local government agencies across the country, providing technology that enables those agencies to better interact with people and businesses.
For instance, NIC technology helps people apply for unemployment insurance, renew licenses, access information, and make secure payments without visiting a government office. In 2020, NIC generated total revenue of $460.5 million and net income of $68.6 million.
"The pandemic has accelerated the shift by governments to online services and electronic payments as more citizens and businesses are interacting digitally with government," said Tyler Technologies President and CEO Lynn Moore.
The market seems to like the match between Tyler Technologies, which specializes in serving local governments, and NIC, which specializes in serving state governments.
The two should be able to leverage one another's offerings and capabilities to cross-sell products and grow the overall business. The transaction is expected to close in the second quarter.