Best Buy to purchase GreatCall for $800 million

GTCR exec discusses the deal with SSN
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Wednesday, August 22, 2018

SAN DIEGO—Chicago-based PE firm GTCR recently announced that it has signed a definitive agreement to sell GreatCall to Best Buy for cash consideration of $800 million.

GreatCall provides connected health and personal emergency response services devices to more than 900,000 subscribers across the United States. The company will maintain its headquarters here, as well as its Care Centers in Carlsbad, Calif., and Reno, Nev.

“It was a truly strategic deal for both the company and the buyer—both GreatCall and Best Buy,” Dave Donnini, managing director for GTCR, told Security Systems News.

“Since the launch of GreatCall, we’ve focused on providing the very best technology and services to the aging population, giving them and their families the peace of mind that comes with the right technology and support to help keep them safe and improve their lives,” David Inns, CEO of GreatCall, said in the announcement. Inns has been with GreatCall since its formation in 2006 and will remain as CEO.

Inns continued, “We are excited to partner with Best Buy to serve the active aging population on a bigger scale. GreatCall is already a growing, profitable business with annual revenue in excess of $300 million. By joining forces, we can do even more for this population, combining our products, services and expertise with Best Buy’s customer focus and scale to meaningfully expand our reach.”

The transaction is expected to close in the third quarter of 2018 and is subject to regulatory approvals and other customary closing conditions.

The two companies have worked together in a partnership, with Best Buy offering GreatCall products in its stores. “Our direct to consumer advertising would highlight ‘Available at Best Buy stores,’” said Donnini. “I think the Best Buy folks believe—and I believe correctly—with greater visibility and merchandising in their stores, they can accelerate the growth of the company.”

Hubert Joly, chairman and CEO of Best Buy, said in a prepared statement: “We know technology can improve the quality of life of the aging population and those who care for them.”

Joly continued, “Now, we have a great opportunity to serve the needs of these customers by combining GreatCall’s expertise with Best Buy’s unique merchandising, marketing, sales and services capabilities. We look forward to working closely with David and his management team and are excited by the opportunities we have in the health space and the strengths we can bring to bear in this area, especially our experience with technology and serving customers in their home.”

Best Buy reached out to GTCR about purchasing GreatCall shortly after the beginning of 2018, however GTCR felt it was too soon after the company’s purchase of GreatCall in mid-2017. “They had strategically identified senior products and services, as an area that was important to their customers, where they want to have a meaningful presence,” Donnini said. “[Best Buy] found GreatCall to be … the best platform to really grow that strategic effort in their business,” he added.

According to Best Buy’s announcement of the transaction, the deal is part of Best Buy’s long-term capital allocation strategy to first fund operations and investments in growth, including acquisitions, and then to return excess free cash flow over time to shareholders through dividends and share repurchases, while maintaining investment-grade credit metrics. The acquisition is not expected to impact Best Buy’s dividend strategy or its previously communicated plan to spend $1.5 billion on share repurchases during fiscal 2019.

Donnini said that GTCR made its investment in GreatCall with the idea of growing the company, which expanded by about 20 percent across both RMR and customers across the 14 months of its ownership, he estimated.

While GTCR does not have any connected health or security companies in its portfolio, it appreciates RMR models and is still interested in these spaces, Donnini said. “We love the security space, and obviously the connected health space has been good to us, too.  We will absolutely continue to look at new opportunities in both those areas,” he said.

Goldman Sachs & Co. LLC and Allen & Company LLC are serving as financial advisors to Best Buy, and Simpson Thacher & Bartlett LLP is serving as legal advisor to the company. Raymond James & Associates Inc. is serving as financial advisor, and Kirkland & Ellis LLP is serving as legal advisor to the seller, private equity firm GTCR.