Best Buy acquiring San Diego’s GreatCall for $800 million, boosting its technology lineup for seniors
San Diego’s GreatCall, which provides mobile phone and connected health services to seniors, is being sold to Best Buy for $800 million in cash – the second time that GreatCall has changed ownership in the past 14 months.
The deal furthers the nation’s top electronics retailer’s strategy of selling more health and wellness products. The Minnesota-based chain is focusing in particular on technology and services targeting an aging population.
There are 50 million Americans over age 65, a number that is expected to increase by more than 50 percent within the next 20 years, according to Best Buy.
“We know technology can improve the quality of life of the aging population and those who care for them,” said Hubert Joly, chairman and chief executive of Best Buy, in a statement. “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.”
GreatCall will maintain its San Diego headquarters, as well as its call centers in Carlsbad and Reno, Nevada. David Inns will continue as chief executive officer. The company employs about 1,200 workers, most of them in its two call centers.
“GreatCall is already a growing, profitable business with annual revenue in excess of $300 million,” said Inns in a statement. “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.”
Founded in 2006, GreatCall has around 900,000 subscribers nationwide for its mobile services tailored for the elderly and their family care-givers, including Jitterbug mobile phones with big buttons for easy dialing.
In June 2017, GreatCall was acquired by Chicago private equity firm GTCR for an undisclosed price. Inns continued at the helm of the company in partnership with GTCR.
In an interview, GTCR Managing Director David Donnini said GreatCall was not for sale, but Best Buy “reached out to us proactively and really stayed after it until we came to an agreement everyone was happy with.
“For Best Buy, I think they have been doing some strategic work and decided senior services and products are going to be core for them going forward,” added Donnini. “They looked at a lot of different companies around the industry, and I think rightly came to the conclusion that GreatCall was the best platform for them to launch this effort.”
In addition to the Jitterbug mobile phones, GreatCall also provides health care/medication reminder apps, 5Star emergency response, 24/7 access to a nurse or doctor and other services via a senior-centric wireless plan. The company also offers wearable emergency response devices.
Best Buy has completed a five-year turnaround plan as it battles Amazon for supremacy in the U.S. consumer electronics market. It has invested in improving its website, price matching and better customer service to bring shoppers into its stores. It boosted U.S. online sales from about $2.5 billion to more than $6 billion over the past five years.
The growth strategy going forward includes expansion into health technology. Best Buy has been investing recently in health-related programs focused on an aging population that include working with several health care providers and insurers, the company said.
For its fiscal 2019 first quarter that ended May 5, Best Buy beat Wall Street’s expectations for both revenue and earnings. The company cited strong consumer demand for driving a 7 percent increase in sales and 11 percent gain in earnings compared with the same quarter last year.
The GreatCall deal is subject to regulatory approvals. It is expected to close by the end of October. Best Buy expects the acquisition will have minimal impact on earnings in fiscal 2019 and 2020, but it expected to add to profits thereafter.
Best Buy announced the acquisition on Wednesday after markets closed. Its shares shed 2.7 percent amid an overall market sell off to close $76.38 on the New York Stock Exchange.
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