WEX to acquire HSA assets for $250M 'to better leverage investments'
File photo / Courtesy WEX Inc.
WEX Inc., headquartered in Portland, is a financial technology service provider for the fleet, travel and health care sectors.
Portland-based financial technology services provider WEX Inc. (NYSE: WEX) on Thursday said it will acquire health savings account assets of HealthCare Bank, for around $250 million.
The Fargo, N.D.-based institution is the custodian bank for customers of WEX's Health division. The agreement includes potential additional consideration based on any future increases in the federal funds rate.
Separately, WEX said was redeeming $400 million in debt.
Under the terms of the acquisition agreement, WEX will pay approximately $200 million in cash, with two additional deferred payments of $25 million in July 2023 and January 2024.
WEX said it believes the acquisition will allow it to better capture the economics from the assets.
“This asset purchase expands WEX’s role in the attractive consumer-directed health care ecosystem and aligns with our growth strategy,” Robert Deshaies, president of WEX’s Health division, said in a news release. “We are excited to provide a more streamlined relationship experience, one that positions us to better leverage our investments to provide market-leading HSA solutions.”
WEX expects to close the transaction in second quarter of 2021, subject to regulatory approvals and other closing conditions.
Separately on Thursday, WEX announced that it will redeem its outstanding $400 million 4.75% senior secured notes, due in February 2023, on March 15. The Bank of New York Mellon Trust Co. is the trustee for the notes.
The redemption price of the notes is $400 million plus accrued and unpaid interest through the proposed redemption date. The redemption is expected to be funded from cash on hand. The company currently has more than $800 million in available capacity on a revolver to fund cash needs.
Previous acquisition
In December, WEX completed the acquisitions of eNett, a provider of business-to-business payments solutions for the travel industry, and B2B payments company Optal, for around $577.5 million, well below the original price tag, and settled a lawsuit brought by the sellers.
WEX's recent deals come amid a bullish outlook overall for mergers and acquisitions involving Maine companies after deal volume in and out Maine in 2020.
WEX is scheduled to report fourth-quarter and full-year 2020 earnings on Feb. 24.
Led by Chair and CEO Melissa Smith, the company operates in more than 10 countries and in 20 currencies through approximately 5,000 associates around the world.
WEX's Health financial technology platform serves 390,000 employers and more than 32 million consumers better manage health care costs.
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