WEX Signs Agreement to Acquire Discovery Benefits
January 17 2019 - 6:30AM
Business Wire
- Advances WEX’s employee benefits
platform with the addition of one of the fastest-growing solutions
providers in the marketplace
- Complements WEX’s technology platform
with leading benefits account technology
WEX (NYSE:WEX), a leading financial technology service provider,
today announced the signing of an agreement to acquire Discovery
Benefits, Inc. (DBI), a high-growth employee benefits administrator
to more than one million consumers across all 50 states. DBI plays
a key role in the consumer-directed healthcare ecosystem by
offering account administration technology and services.
DBI has been a well-established partner of WEX’s Health division
for more than a decade, trusting WEX’s proven healthcare technology
platform to manage a portion of its consumer-directed account
administration. This acquisition will combine one of the industry’s
fastest-growing benefits administrators—known for its leading
benefits account technology—with WEX’s dynamic, cloud-based
technology platform. The acquisition is expected to accelerate
WEX’s growth rate, provide partners and customers with a more
comprehensive suite of products and services, and expand the
Company’s diverse go-to-market channels to include consulting firms
and brokers.
“The acquisition of Discovery Benefits enhances WEX’s position
as a leading technology platform in the healthcare space and aligns
with our longer-term strategy to further reduce exposure to
macroeconomic forces,” said Melissa Smith, CEO of WEX. “This
combination strengthens our overall value proposition through new
partnerships, integrated products, and the opportunity to offer a
more comprehensive set of solutions. We are excited to extend our
reach into the rapidly-growing employee benefits market and look
forward to building on our track record of success in the
healthcare space.”
According to the latest research from Devenir on the top 20 HSA
providers, DBI is the fastest-growing provider. The company
generated approximately $100 million in revenue during 2018. Under
the terms of the agreement, WEX will pay a total cash consideration
of approximately $425 million, including $50 million which will be
deferred until January of 2020. In addition, the transaction is
expected to generate approximately $50 million in net present value
of tax benefits. WEX is in advanced discussions with its
relationship banks to expand available borrowing capacity and
expects to announce further details regarding these arrangements in
the near future. The sellers of DBI will also retain an equity
interest of approximately 5% of the entity resulting from the
combination of WEX’s Health division and Discovery Benefits. WEX
expects the acquisition to be immaterial to adjusted net income in
year one and yield approximately $15 million in annual run-rate
synergies within the first 24 months following the close of the
transaction. The transaction is expected to close in the first
quarter of 2019, subject to regulatory approvals and other
customary closing conditions.
About WEX
Powered by the belief that complex payment systems can be made
simple, WEX (NYSE: WEX) is a leading financial technology service
provider across a wide spectrum of sectors, including fleet, travel
and healthcare. WEX operates in more than 10 countries and in more
than 20 currencies through more than 3,500 associates around the
world. WEX fleet cards offer 11.5 million vehicles exceptional
payment security and control; purchase volume in its travel and
corporate solutions grew to $30.3 billion in 2017; and the WEX
Health financial technology platform helps 300,000 employers and
more than 25 million consumers better manage healthcare expenses.
For more information, visit www.wexinc.com.
Safe Harbor Statement
Certain matters discussed in this press release are
"forward-looking statements" intended to qualify for the safe
harbors from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such by the context of the statements,
including words such as “believe,” “expect,” “anticipate,” “plan,”
“may,” “would,” “intend,” “estimate,” “guidance” and other similar
expressions, whether in the negative or affirmative, although not
all forward-looking statements contain such words. These
forward-looking statements are based on current expectations,
estimates, forecasts and projections about the industry and markets
in which the Company operates and management’s beliefs and
assumptions. There can be no assurance that the benefits of the
proposed acquisition will: be successful in accelerating the
Company’s growth rate; increase the Company’s product suite; be
successful in expanding capacity; achieve expected financial
results with regard to accretion; achieve synergy targets; close at
all or in the first quarter of 2019; or, enable advanced partner or
customer offerings. The Company cannot guarantee that it actually
will achieve the financial results, plans, intentions, expectations
or guidance disclosed in the forward-looking statements made. Such
forward-looking statements involve a number of risks and
uncertainties, any one or more of which could cause actual results
to differ materially from those described in such forward-looking
statements. Such risks and uncertainties include or relate to,
among other things: the effects of general economic conditions on
fueling patterns as well as payment and transaction processing
activity; the impact of foreign currency exchange rates on the
Company’s operations, revenue and income; changes in interest
rates; the impact of fluctuations in fuel prices; the effects of
the Company’s business expansion and acquisition efforts; potential
adverse changes to business or employee relationships, including
those resulting from the completion of an acquisition; competitive
responses to any acquisitions; uncertainty of the expected
financial performance of the combined operations following
completion of an acquisition; the ability to successfully integrate
the Company's acquisitions; the ability to realize anticipated
synergies and cost savings; unexpected costs, charges or expenses
resulting from an acquisition; the Company's failure to
successfully operate and expand ExxonMobil's European and Asian
commercial fuel card programs; the failure of corporate investments
to result in anticipated strategic value; the impact and size of
credit losses; the impact of changes to the Company's credit
standards; breaches of the Company’s technology systems or those of
third-party service providers and any resulting negative impact on
the Company’s reputation, liabilities or relationships with
customers or merchants; the Company’s failure to maintain or renew
key agreements; failure to expand the Company’s technological
capabilities and service offerings as rapidly as the Company’s
competitors; failure to successfully implement the Company’s
information technology strategies and capabilities in connection
with its technology outsourcing and insourcing arrangements and any
resulting cost associated with that failure; the actions of
regulatory bodies, including banking and securities regulators, or
possible changes in banking or financial regulations impacting the
Company’s industrial bank, the Company as the corporate parent or
other subsidiaries or affiliates; the impact of the Company’s
outstanding notes on its operations; the impact of increased
leverage on the Company's operations, results or borrowing capacity
generally, and as a result of acquisitions specifically; the
incurrence of impairment charges if the Company’s assessment of the
fair value of certain reporting units changes; the uncertainties of
litigation; as well as other risks and uncertainties identified in
Item 1A of the Company’s Annual Report for the year ended December
31, 2017, filed on Form 10-K with the Securities and Exchange
Commission on March 1, 2018.
The Company's forward-looking statements do not reflect the
potential future impact of any alliance, merger, acquisition,
disposition or stock repurchases. The forward-looking statements
speak only as of the date of this press release and undue reliance
should not be placed on these statements. The Company disclaims any
obligation to update any forward-looking statements as a result of
new information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190117005121/en/
Media Contact:Rob
Gould1-207-523-7429robert.gould@wexinc.comInvestor
Contact:Steve Eldersteve.elder@wexinc.com207.523.7769
WEX (NYSE:WEX)
Historical Stock Chart
From Mar 2024 to Apr 2024
WEX (NYSE:WEX)
Historical Stock Chart
From Apr 2023 to Apr 2024