Tyler Technologies has signed a definitive agreement to acquire privately held New World Systems Corporation for $670 million in cash and stock.
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New World Systems, a provider of public safety and financial solutions for local governments, will bring an important element to Tyler’s portfolio of solutions.
Founded in 1981 by president and CEO Larry D. Leinweber, the Troy, Michigan-based company has more than 2,000 public sector customers and more than 470 employees. The companies are highly complementary, and combining them supports Tyler’s strategy of being an industry leader in all major enterprise applications essential to local government.
New World Systems’ principal products are Aegis, a public safety suite for dispatch centers, police officers, firefighters, paramedics, corrections officers, command staff, and all first responders, and Logos, a suite of public administration software that meets the accounting needs of city and county governments. Public safety represents approximately 67 percent of New World Systems’ revenues.
Under the terms of the agreement, Tyler will acquire all of the equity in New World Systems for $360 million in cash and approximately 2.1 million shares of Tyler’s common stock, representing approximately 5.9 percent of Tyler’s outstanding common shares post transaction, subject to customary post-closing adjustments.
The cash portion of the purchase price will be funded from cash on hand and proceeds from a new revolving credit facility. The transaction is expected to close in the fourth quarter of 2015 and is subject to regulatory approval and customary closing conditions. Leinweber will join Tyler’s board of directors upon the closing of the transaction.
This transaction is expected to be immediately accretive to non-GAAP earnings per diluted share, with an expected impact to non-GAAP revenues of approximately $134 million, to adjusted EBITDA of approximately $49 million, and to non-GAAP earnings per diluted share of approximately $0.56 for the year ending December 31, 2016.
These estimates are non-GAAP measures that reflect certain adjustments Tyler makes to provide insight into operating results. A description of those adjustments is provided below. ■