Highmark Inc.'s vision subsidiary is selling its wholesale eyewear unit, Viva Optique, to Marcolin SpA, an international eyewear designer based in Italy, the companies announced.
Highmark's vision unit, HVHC Inc., has agreed to a stock purchase agreement with Marcolin and its majority owner, European private equity firm PAI Partners, which bought a 78 percent stake in Marcolin a year ago.
The deal is expected to close in the next few months. Terms were not divulged, though David Holmberg, HVHC's president and CEO, said HVHC had received a significant return on its initial investment.
Highmark spent $138 million in 2005 to buy Viva, a New Jersey company that designs and licenses popular eyeglass frames such as Guess, Bongo, Sketchers and Gant.
The frame wholesaling division was "the smallest piece of our vision model," Mr. Holmberg said in an interview Thursday. HVHC includes Viva; the Visionworks retail chain, which opened its 600th store last week; Davis Vision, which is Highmark's vision insurance unit; and several lens-manufacturing facilities.
Together, the various vision and optical units turned in a net income of $64.7 million in 2012.
The purchase agreement, which includes a supplier agreement giving Highmark's retail stores a broader selection of frames, will allow Highmark to "redeploy" money on retail expansion and HVHC units, "where we can get a higher return on investment," Mr. Holmberg said.
Highmark had previously announced plans to open 36 or so new Visionworks locations this year and 70 to 90 more in 2014 and beyond. Eventually, Visionworks will have a retail presence in 46 or 47 states.
In a statement, Marcolin CEO Giovanni Zoppas said, "The combination of the two companies will deliver significant extra value for our customers and brands, creating a truly global player in the industry as we look to expand our footprint."
Highmark has steadily been building its vision wing since 1996, when it bought New York-based Davis Vision for $164 million.
In February 2005, it bought Viva International Group (its trade name is Viva Optique), then two months later spent $6.5 million to buy retail outlets Cambridge Eye Associates and Douglas Vision World. The next year, HVHC bought Eye Care Centers of America Inc., which had 385 stores in 36 states.
The moves allowed Highmark to better compete with other eyewear and retail giants -- Wal-Mart was moving into vision at the time and Luxottica Inc., an Italian company, was pursuing its own "vertical integration" strategy, distributing designer frames and snapping up well-known U.S. retail chains such as Pearle Vision, Sears Optical, LensCrafters and Sunglass Hut.
Today, Highmark considers itself the largest fully integrated U.S.-based vision company.
In the Viva deal, Marcolin will take on full ownership of Viva, but HVHC will keep a financial stake in the company in the form of subordinated debt. As that debt diminishes, so will Highmark's remaining financial interest in Viva.
Bill Toland: email@example.com, 412-263-2625; or on Twitter @btoland_pg. First Published October 24, 2013 11:11 AM