The deal is expected to close in the second quarter, subject to conditions including regulatory clearances and a vote of NIC holders.
Under the terms, approved by both companies' boards, NIC holders will receive $34 cash for each of their shares. That's a premium of about 14% to its closing price on Tuesday.
Shares of NIC, Olathe, Kan., at last check were surging 17% to $34.79.
Tyler Technologies, Plano, Texas, was up 6.8% to $451.80.
NIC serves more than 7,100 federal, state and local government agencies in the U.S.
The company said that its digital services "make it easier and more efficient for citizens and businesses to interact with government -- providing valuable conveniences like applying for unemployment insurance, submitting business filings, renewing licenses, accessing information, and making secure payments without visiting a government office."
NIC processed more than $24 billion in payments on behalf of citizens and governments in 2020.
Tyler, which provides emergency-management and other software programs to U.S. counties and municipalities, said it planned to fund the transaction with about $700 million of cash on its balance sheet and with new debt. The company has roughly 5,500 employees, while NIC has about 1,000.
"The pandemic has accelerated the shift by governments to online services and electronic payments as more citizens and businesses are interacting digitally with government," Lynn Moore, Tyler’s president and chief executive, said in a statement.
"NIC is uniquely positioned with its deep expertise and robust digital solutions to partner with us in making government more efficient and more accessible to citizens."
Separately, both companies reported fourth-quarter earnings on Wednesday. NIC met Wall Street's estimates, as revenue climbed 62% to $141.2 million, while Tyler Technologies missed the Zacks Consensus estimates.
Goldman Sachs is financial adviser to Tyler, while NIC is advised by Cowen.