WellPoint To buy 1-800 Contacts for $900 million, according to report

INDIANAPOLIS, Mon Jun 4, 2012 –  Health insurer WellPoint Inc. plans to buy contact-lens and eyewear retailer 1-800 Contacts Inc. for a transaction value close to $900 million, the Wall Street Journal reported, citing a person familiar with the matter.

The deal will close in the third quarter and will start adding to the company’s per-share earnings in 2014, the Journal said in its report. The deal will be financed with cash on hand, the report said.

“We see a unique way of tying 1-800 Contacts into our product design,” WellPoint Chief Financial Officer Wayne DeVeydt is quoted as saying in the report.

WellPoint would also get “a diversified revenue stream into a higher-margin business,” the report said, quoting the CFO.

1-800 Contacts has after-tax margins in the “double digit range,” compared with around 4 percent to 5 percent across WellPoint’s health-insurance business lines, the report quoted DeVeydt as saying.

WellPoint and 1-800 Contacts Inc. could not reached for comments.