1-800 Contacts agrees to be bought by Fenway Partners

1-800 Contacts Inc., a money-losing retailer of contact lenses by telephone and over the Internet, will be acquired by buyout firm Fenway Partners Inc. for about $340 million.

Fenway will pay $24.25 a share, a premium of about 21 percent based on the company's closing share price on June 1, Draper, Utah-based 1-800 Contacts said in a statement.

It would be the 10th announced acquisition for New York- based Fenway Partners in the past four years, according to Bloomberg data. The firm was founded in 1994 by Chief Executive Officer Peter Lamm and President Richard Dresdale. The company has about $1.7 billion under management.

1-800-Contacts has reported an annual loss every year beginning in 2002 and a loss in every period from the second quarter of 2006 as the costs of goods sold and selling, general and administrative expenses have risen.

Shares of 1-800 Contacts rose $4.07, or 20 percent, to $24.15 as of 11:31 a.m. in Nasdaq Stock Market composite trading. Earlier, they traded as high as $24.34, their fourth-biggest jump since shares were first sold to the public in February 1998. Before today, they had risen 23 percent so far this year.

Sonenshine Partners LLC and Goldman Sachs Group Inc. served as financial advisers to the 1-800 Contacts board, and Kirkland & Ellis LLP was legal adviser. Ropes & Gray LLP was legal adviser to Fenway, and J.P. Morgan Securities Inc. and JPMorgan Chase Bank have agreed to provide debt financing for the transaction.