(Reuters) - Best Buy Co Inc said on Wednesday it would buy health services provider GreatCall Inc for $800 million in cash, its largest acquisition ever, as it focuses on selling products and services to an aging U.S. population.
The No. 1 U.S. consumer electronics retailer currently sells health and wellness-related products and has sold GreatCall merchandise for a decade as a retail partner.
Privately held GreatCall, with annual revenue of $300 million, offers personal emergency response services for senior citizens along with mobile products and connected devices and has over 900,000 paying subscribers, Best Buy said.
The acquisition offers Best Buy an opportunity to combine GreatCall’s offerings with its merchandising, marketing, sales and services capabilities, the retailer’s Chief Executive Hubert Joly said in a statement.
The health space is a large, growing market in which technology can address the needs of aging consumers, their caregivers and payers. There are approximately 50 million Americans over age 65, a number that is expected to increase by more than 50 percent within the next 20 years, Best Buy said.
Moody’s retail analyst Charlie O’Shea said he views this transaction as a long-term investment, with short-term profitability as a secondary consideration.
“The $800 million price tag can easily be covered out of existing cash balances and operating cash flow,” he said.
The transaction is likely to close by end of the third quarter of fiscal 2019, subject to regulatory approvals.
Best Buy said it expects the impact of the acquisition on its non-GAAP earnings to be neutral in fiscal 2019 and fiscal 2020 and accretive to earnings by fiscal 2021.
GreatCall was founded in 2006 and is based in San Diego. Its products offer one-touch connections to U.S.-based, trained agents, who connect the user to family caregivers, provide general concierge services, answer questions and dispatch emergency personnel.
GreatCall will operate as a separate unit and the company’s Chief Executive Officer David Inns will remain in his position after the sale closes, Best Buy said.
The retailer’s shares, which have risen nearly 12 percent since the start of the year ended 2.7 percent down at $76.38 per share on Wednesday.
Reporting by Nandita Bose in New York and Tamara Mathias in Bengaluru; editing by Dan Grebler and Diane Craft