Benefitfocus Inc., the Daniel Island benefits software company that went public nine years ago, has agreed to be acquired by Voya Financial Inc. for $10.50 a share in cash, the companies announced today.

The deal is valued at about $570 million, including Benefitfocus’ debt and outstanding preferred stock. The price is about 49% above Benefitfocus’ closing stock price on Oct. 31, according to the announcement.

Benefitfocus’ board unanimously approved the agreement, which still needs the approval of its shareholders and is subject to other customary closing conditions. The companies expect to close in the first quarter of 2023.

Why Voya wants it

Voya, a New York-based health, wealth and investment company, said the purchase will speed up its strategy of selling benefits and savings products through the workplace.

Benefitfocus’ platform reaches more than 25 million people through its employer and health plan customers, the companies said. Combined with Voya’s existing workplace customers, Voya will serve about 38 million people, or roughly 1 in 10 Americans, once the deal closes.

“Our acquisition of Benefitfocus is an exciting opportunity to accelerate our workplace-centered strategy and increase our capacity to meet the growing demand for comprehensive benefits and savings solutions at the workplace,” said Heather Lavallee, Voya’s president and CEO-elect.

Matt Levin, Benefitfocus’ president and CEO, said joining Voya would bring the company’s products to more customers.

“This transaction delivers significant and immediate value for our shareholders, broader opportunities for our associates, and strengthens our go-to-market offering with Voya’s platform of workplace-centered services and solutions,” Levin said.

What changes in Charleston

Benefitfocus will operate as a distinct business under Voya, with its current management team staying in place, the companies said. Voya also reaffirmed its commitment to Benefitfocus’ relationships with brokers, advisers and insurance carriers.

“Our commitment to an open-architecture, product-agnostic approach at Benefitfocus, and to maintaining strategic partnerships with both clients and intermediaries, is unwavering,” said Rob Grubka, CEO of Voya’s health solutions business.

The announcement did not address Benefitfocus’ Charleston headcount or its Daniel Island campus.

Benefitfocus had about 1,100 employees at the end of 2021, all in the United States, according to its most recent annual report. It occupied about 289,000 square feet on the Daniel Island Executive Center campus under leases that run through 2031. Most of its employees have worked remotely since March 2020, and the company has moved to a permanent hybrid arrangement. It has sublet 32,500 square feet of the campus to another tenant.

The terms

Holders of Benefitfocus common stock will receive $10.50 a share in cash.

Voya expects the purchase to add to its adjusted operating earnings per share right away on a cash basis, even before any added revenue from combining the businesses. It plans to discuss the deal on its third-quarter earnings call Wednesday.

Perella Weinberg Partners is Voya’s financial adviser, and Cleary Gottlieb Steen & Hamilton is its legal counsel. Barclays advised Benefitfocus, and Sullivan & Cromwell served as its legal counsel.

From IPO to sale

Benefitfocus was founded in 2000 by Mason Holland and Shawn Jenkins. It sold shares to the public at $26.50 each in September 2013 and trades on Nasdaq under the symbol BNFT.

Its software helps employers and health plans run benefits enrollment and administration, and it sells to brokers and consultants as well. Revenue slipped 1.9% in 2021 to $263.1 million, and the company reported a net loss of $32.2 million. In its annual report, Benefitfocus said it expected revenue to decline again in 2022, citing lower revenue from health plan customers and planned reductions in noncore and unprofitable work.

Holland, a co-founder, stepped down as executive chairman and left the board in June 2021, according to company filings.

Voya serves 14.3 million individual, workplace and institutional clients and has about 6,000 employees, the company said. It had $644 billion in assets under management and administration as of June 30.