Reuters: Mergers News: UPDATE 1-WellPoint to buy 1-800 Contacts for $900 mln

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UPDATE 1-WellPoint to buy 1-800 Contacts for $900 mln Jun 4th 2012, 13:05 Mon Jun 4, 2012 9:05am EDT June 4 (Reuters) - Health insurer WellPoint Inc said on Monday it plans to buy contact-lens and eyewear retailer 1-800 Contacts Inc to diversify into a higher-margin business. The companies did not release terms of the acquisition, which is expected to close in the third quarter. However, a source familiar with the transaction said the price was about $900 million. 1800 Contacts, which is owned by private equity firm Fenway Partners, has about 3.3 million customers, and is the largest U.S. direct-to-consumer retailer of contact lenses, WellPoint said. Through its eponymous phone number and other websites, 1-800 Contacts sells contacts as well as frames and lenses for glasses. WellPoint Chief Executive Officer Angela Braly said in a statement that the deal "diversifies the company's revenue stream into the complementary and higher-margin eyewear business." WellPoint said the deal is expected to reduce earnings by about 4 cents per share this year, due to transaction and integration costs. The company, which plans to finance it with available cash on hand, now expects 2012 net income of at least $7.80 per share. Fenway Partners acquired 1-800 Contacts in 2007 for about $340 million. The deal is a four-times return on investment for the private equity firm, the source said. Link this Share this Digg this Email Reprints

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