SOUTH PORTLAND, Maine - WEX has officially completed its acquisition of Fargo-based Discovery Benefits.
The deal was finalized Tuesday, March 5, WEX said in a news release.
“The acquisition of Discovery Benefits is a significant milestone for WEX as it combines two integral parts of the consumer-directed benefits value chain, strengthening WEX’s position as a leading provider of innovative healthcare technology solutions,” WEX CEO Melissa Smith said in a prepared statement.
“We are excited to provide partners and customers with a more comprehensive suite of products and services, and expand the company’s diverse go-to-market channels to include consulting firms and brokers,” Smith said.
Jeff Young, president of WEX Health, was in Fargo Wednesday, March 6, to speak at the 1 Million Cups event held at the Sanctuary Events Center.
Young said the acquisition of Discovery Benefits improves WEX’s ability to grow in a competitive marketplace.
“We’re looking to scale,” Young said. “We’ll scale in the markets they’re serving today. And then there’s some new markets that I think we’ll be able to serve as we go forward. So, it’s a great spot.
“Health care is a business where scale is helpful” for technical innovation, service and technology, he said.
“We think we’re going to be great in the businesses that both companies were in previously. And then there are some new businesses that we will be able to move into together that we probably wouldn’t have been able to do separately,” Young said.
“As we think about serving the brokers that are out there. The broad set of business partners that we have, we’ve got a nice landscape there,” Young said. “Being able to take things like business intelligence, mobile devices, smart debit cards, you know, we’ll be able to get those things that have a lot of scale to more people, which is exciting for us.”
The deal first became public in mid-January, when State Bankshares, the parent company of Fargo-based Bell Bank, announced it has signed an agreement to sell its wholly-owned subsidiary, Fargo-based Discovery Benefits Inc., to WEX, a global provider of payment processing and business solutions.
WEX paid State Bankshares $425 million, and State Bankshares retained about 5 percent equity interest in the combination of Discovery Benefits and WEX’s health division.
Discovery Benefits administers consumer-directed benefits, including health savings accounts and flexible spending accounts.
Discovery Benefits started with seven employees, but after 15 years grew to more than 900 employees between its Fargo headquarters and offices in Brookings, S.D.
At the time of the initial announcement, Bell Bank president and CEO Michael Solberg said the deal developed because of WEX’s commitment to employees and the Fargo market. With the addition of the Discovery Benefits team, WEX was expected to employ more than 1,100 people in Fargo, West Fargo and Brookings.
WEX said Discovery Benefits has been a partner of WEX’s health division for more than a decade, with WEX’s health care technology platform managing a portion of its consumer-directed account administration.