Fleet card specialist WEX Inc., which has been looking to diversify into more areas to use its payment-processing capabilities, on June 16 announced plans to acquire Evolution1, a cloud-based technology and health care payment solutions provider.
The two companies entered into a definitive agreement for WEX to acquire Evolution1 for $532.5 million in cash. They expect to close the deal in the third quarter. The transaction, unanimously approved by the boards of directors of both companies, is subject to regulatory and other approvals.
“The acquisition of Evolution1 advances WEX’s long-term strategy to extend our scalable business model into high-growth, high-value markets with complex payment systems,” Melissa Smith, WEX’s president and CEO, said in a statement. “As a leading provider of technology-based solutions that simplify health care payments, Evolution1 will enable WEX to address multiple aspects of the healthcare payment system, expanding our addressable market while building on our growth in the fleet and travel space.”
WEX says it traditionally has focused on virtual product solutions for payer-to-provider payments, which accounts for almost $1 trillion dollars of annual spend industry wide. The company continues to see this as an area of further opportunity for the company, but it also sees an opportunity to address another aspect of the health care system, consumer-to-provider payments, as more spend is shifting toward consumer controlled, the company said in the deal announcement.
Through the acquisition of Evolution1, WEX said it will build on its existing B2B business model, providing payment services to intermediaries such as exchanges and third-party administrators that have direct contact with consumers. Evolution1 has an addressable market of more than $1 billion in revenue with a meaningful and growing market share position. This market opportunity is expected to double by 2019, the companies said.
Evolution1 provides cloud-based technology and payment solutions that help simplify the health care experience for millions of employers and consumers. In 2013, it processed more than 65 million transactions and $5 billion in payment volume. The company serves 90,000 employers and 10 million consumers in the U.S. and Canada.
BofA Merrill Lynch acted as financial advisor to WEX, while WilmerHale provided legal counsel. Deutsche Bank acted as financial advisor to Evolution1, while Weil Gotshal & Manges provided legal counsel.
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