GTY Technology Holdings Inc. (“GTY”), announced this afternoon that it has entered into definitive agreements to acquire six companies to establish an integrated software solution in the highly fragmented and under-penetrated public sector market.

GTY will be acquiring the companies for total aggregate base consideration of $365 million in cash and stock, plus an aggregate earn-out consideration of up to $132 million in cash and stock.  Furthermore, the new entity (CityBase) is expected to have an equity incentive plan in place at closing with 5.3 million shares reserved for future awards to employees and other plan participants.

Warrant Exchange

Notably, GTY expects to hold a special meeting of its warrantholders (to be held immediately prior to the special meeting of GTY’s shareholders for the business combination) to approve an amendment to the warrant agreement.  The proposal will involve, at the closing of the business combination, each whole public warrant will be automatically exchanged for $1.35 in cash and each private placement warrant will be automatically exchanged for $0.75 in cash. Approval of the warrant agreement amendment will require the affirmative vote of at least 50% of the outstanding public warrants.

There is no scheduled conference call, but we will be reviewing the presentation filed on GTY’s website (https://www.gtytechnology.com/) and the business combination documents when they are filed.

Per the press release, GTY will form a new entity which will acquire the following companies:

• Bonfire Interactive Ltd. (“Bonfire”), based in Canada, a developer of cloud-based eSourcing and procurement software that helps purchasers find, engage, and evaluate suppliers and manage the resulting contracting and performance relationships;
• CityBase, Inc. (“CityBase”), based in Chicago, IL, a developer of technology, payment and communication channels and aggregator of operational data that also creates websites and mobile applications for utilities, self-service kiosks and point of sale tablets with customized solutions;
• eCivis Inc. (“eCivis”), based in Pasadena, CA, a cloud-based grants management system provider for state, local and tribal governments that also offers writing, consulting and professional services as well as financial and program performance tracking, cost allocation and budgeting;
• Open Counter Enterprises Inc. (“OpenCounter”), based in San Francisco, CA, a builder of user-friendly software to guide applicants through complex permitting and licensing procedures;
• Questica Inc. and Questica USCDN Inc. (together, “Questica”), based in Canada, a provider of budgeting software, performance management and transparency and data visualization solutions; and
• Sherpa Government Solutions LLC (“Sherpa”), based in Denver, CO, a provider of public sector budgeting software and consulting services.