Payroc WorldAccess, an omni-channel payments provider, has agreed to acquire integrated software and services provider i3 Verticals’ merchant of record payments business in an all-cash deal worth $440m.
The transaction will also include i3 Verticals’ associated proprietary technology related to the divested business.
i3 Verticals’ business to be sold comprises two non-core assets from the firm’s software and services segment pertaining to the non-profit and property management vertical markets. They represent nearly $4m in annual adjusted EBITDA.
Payroc WorldAccess CEO James Oberman said: “The i3 merchant business is an ideal fit for Payroc, and their values and goals align with ours.
“Our ongoing commitment to combine a personal relationship with payments technology will enhance growth for i3’s partners and create opportunity for i3’s team members that join Payroc once the transaction closes.”
Through the sale of its merchant of record payments business, i3 Verticals aims to simplify its business. i3 Verticals’ remaining business will include vertical market software solutions that fit its customers’ specific enterprise requirements.
Besides, the company’s customers will be focused to three strategic verticals, namely public sector, education, and healthcare.
Following the closing of the deal, i3 Verticals’ revenue will be around 75% from software and related services revenue and 25% from payments and others.
The proceeds from the transaction, after covering transaction expenses, will be used to pay down debt, said i3 Verticals.
i3 Verticals chairman and CEO Greg Daily said: “This is a key strategic moment for our Company. After the divestiture, we will be a pure vertical market software business focused entirely on the Public Sector, Education and Healthcare markets.
“Importantly, we have retained our payment facilitation platform and our ability to attach payments to our vertical software solutions. Upon the completion of this disposition, our balance sheet will be stronger than ever, and we are excited to begin our next chapter.”
Subject to closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the deal is anticipated to be completed in i3 Verticals’ fiscal Q4.
Raymond James & Associates is serving as financial adviser to i3 Verticals while Bass, Berry and Sims is acting as the legal adviser.
For Payroc WorldAccess, Troutman Pepper Hamilton Sanders is serving as legal adviser.
