i3 Verticals, Inc. (“i3 Verticals” or the “Company”) (NASDAQ:
IIIV), and Payroc WorldAccess, LLC (“Payroc”), a leading
omni-channel payments provider, today announced that the companies
have entered into a definitive agreement whereby Payroc will
acquire i3 Verticals’ merchant of record payments business,
including its associated proprietary technology (the “divested
business”), in an all-cash transaction for $440 million, subject to
certain purchase price adjustments.
Greg Daily, Chairman and CEO of i3 Verticals stated, “i3 began
as a payments business, and we built a top-of-the-line merchant of
record payment platform bringing a wide variety of solutions to
third-party partners and software providers. We do not part with
this platform lightly and we believe that it has a bright future.
We are proud and appreciative of our team managing this business
and are confident we have found them the right home.
“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.”
“Payroc is excited about this combination,” said James Oberman,
Chief Executive Officer of Payroc. “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.”
The transaction is subject to closing conditions as set forth in
the definitive agreement, including the expiration or termination
of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976. The closing is expected to occur sometime
in i3 Verticals’ fiscal fourth quarter.
Strategic Rationale and Benefits of the Transaction
- Selling the divested business will simplify i3’s business. The
remaining business consists of vertical market software solutions
that fit the Company's customers’ specific enterprise needs.
- The divested business includes two non-core assets from i3's
Software and Services segment related to the Non-profit and
Property Management vertical markets, representing approximately $4
million in annual adjusted EBITDA.
- The Company's customers will be narrowed to three strategic
verticals: Public Sector, Education and Healthcare.
- i3's ongoing business will be approximately 75% software and
related services revenue, and 25% payments and other.
- Proceeds from the transaction, after payment of transaction
expenses, will go towards paying down debt.
- After taxes, and in the absence of other acquisitions, the
Company expects to be able to pay down all, or nearly all, of its
2023 Senior Secured Credit Facility.
- i3's existing 2023 Senior Secured Credit Facility will remain
in place, which includes $450 million of aggregate commitments in
the form of a revolving credit facility.
- After reducing the Company's debt balance its applicable
borrowing rates under the facility will fall by 1% and remain there
until such time that Consolidated Total Net Leverage Ratio reaches
2x.
- The borrowing capacity generated will provide significant
capital for M&A.
For additional information regarding the terms of the definitive
agreement and the transactions contemplated thereby, see the
Company’s Current Report on Form 8-K to be filed in connection with
the execution of the definitive agreement.
Advisors
Raymond James & Associates, Inc. are serving as financial
advisors to i3 Verticals and Bass, Berry and Sims, LLP is serving
as the Company’s legal advisor.
Troutman Pepper Hamilton Sanders LLP is serving as Payroc’s
legal advisor.
About i3 Verticals
The Company delivers seamless integrated software and services
to customers in strategic vertical markets. Building on its
sophisticated and diverse platform of software and services
solutions, the Company creates and acquires software products to
serve the specific needs of public and private organizations in its
strategic verticals, including its Public Sector, Education and
Healthcare verticals.
About Payroc
Payroc WorldAccess, LLC is a high-growth merchant acquirer,
processor, and payment integrations powerhouse processing more than
$93 billion in annual transaction volume for more than 160,000
merchants. Payroc offers best-in-class sales enablement and payment
processing technology on a global scale, delivering proprietary,
innovative, and full-service merchant acquiring solutions together
with key card brand network payment sponsorship registrations.
Payroc (through its subsidiaries) is a registered Visa third party
processor, a Visa independent sales organization, a Mastercard
third-party service provider, a Mastercard member service provider,
a payment facilitator, an encryption support organization for Fifth
Third Bank, National Association ("Fifth Third"), and, in Canada is
registered with Peoples Trust Company, among many others.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995,
which involve risk and uncertainties.
You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “estimate,”
“expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,”
“should,” “could have,” “exceed,” “significantly,” “likely” and
other words and terms of similar meaning in connection with any
discussion of the timing or nature of future operating or financial
performance or other events.
These forward-looking statements are based on the Company’s
current beliefs, understandings and expectations. These
forward-looking statements are neither promises nor guarantees, but
are subject to a variety of risks and uncertainties, many of which
are beyond the Company’s control, which could cause actual results
to differ materially from those contemplated in these
forward-looking statements. Factors that could cause actual results
to differ materially from those expressed or implied include: (i)
the transactions contemplated by the definitive agreement (the
“Transactions”) may not be completed in a timely manner or at all,
because, among other reasons, conditions to the closing of the
Transactions set forth in the definitive agreement may not be
satisfied or waived; (ii) uncertainty as to the timing of
completion of the Transactions; (iii) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the definitive agreement; (iv) risks related to
disruption of management’s attention from ongoing business
operations; (v) post-closing risks related to the ancillary
agreements to be entered into upon the closing of Transactions in
accordance with the terms of the definitive agreement; and (vi) the
Company’s ability to execute on its strategy and achieve its goals
and other expectations after any completion of the Transactions, as
well as the risks set forth in the Company’s Annual Report on Form
10-K for the fiscal year ended September 30, 2023, filed with the
Securities and Exchange Commission on February 21, 2024, the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2024, filed with the Securities and Exchange
Commission on May 10, 2024, and the Company’s other filings with
the Securities and Exchange Commission.
Any forward-looking statement made by the Company in this press
release speaks only as of the date of this press release, and the
Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240626983858/en/
Clay Whitson Chief Financial Officer (888) 251-0987
investorrelations@i3verticals.com
i3 Verticals (NASDAQ:IIIV)
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