Health insurer WellPoint to acquire contact retailer 1-800 Contacts
US health insurer WellPoint Inc plans to buy contact-lens and eyewear retailer 1-800 Contacts Inc, the largest direct-to-consumer retailer of contact lenses in America, from private equity firm Fenway Partners in deal estimated to be close to $900 million.
While confirming the deal with the largest U.S. health insurer by enrollment, New York based Fenway Partners did not disclose the terms of the transaction.
"This acquisition strategically aligns with our efforts to capitalize on new opportunities for growth, and further diversifies the company's revenue stream into the complementary and higher-margin eyewear business," said Angela F. Braly, chair, president and chief executive officer of WellPoint in a statement Monday.
The lens company has around 3.3 million customers for its prescription contact lenses online and over the phone. Fenway had acquired 1-800 Contacts in June 2007 for $340 million.
With over 38 million people wearing contacts and more than 140 million people wearing glasses in the U.S, Indianapolis-based
WellPoint sees significant opportunity to attract new customers. The health insurer has nearly 34 million people covered under its brand and over 62 million people served through its subsidiaries.
Pointing to 1-800 CONTACTS brand value and business model, Braly said, "We believe these assets will drive continued strong future growth in the eyewear marketplace and also significantly enhance our efforts to build trusted relationships with consumers across the entire country."
Reuters had reported earlier that WellPoint agreed to pay about $900 million for the lens provider.
"We are excited to be a part of not only one of the largest health benefits providers in the country, but also the most customer-focused," said Jonathan Coon, chief executive officer and co-founder of 1-800 CONTACTS.
"We look forward to joining WellPoint to serve the eyewear needs of our mutual customers. Our companies share common goals of providing consumers with the highest level of service and making the experience as simple as possible."
The acquisition is expected to close in the third quarter of 2012, and is subject to standard closing conditions and customary approvals required under the Hart-Scott-Rodino Antitrust Improvements Act.
The transaction will be financed from available cash on hand and is expected to be slightly dilutive to earnings per share in 2012 by approximately $0.04 due to transaction and integration costs.
WellPoint now expects 2012 net income to be at least $7.80 per share, including $0.19 per share of net investment gains from the first quarter of 2012.
Source:United States News.Net
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