Ray-Ban Maker EssilorLuxottica Strikes $6.1 Billion Deal for European Rival
31 July 2019 - 7:43PM
Dow Jones News
By Ben Dummett
EssilorLuxottica SA agreed Wednesday to buy control of European
rival GrandVision NV for about EUR5.49 billion ($6.1 billion), in a
move that would further cement the Ray-Ban maker's global position
as the leading manufacturer and retailer of eyewear and lenses.
The deal comes after EssilorLuxottica disclosed earlier in July
its talks to acquire the almost 77% stake from HAL Holding NV, a
holding company. EssilorLuxottica said that after completing the
HAL transaction it would seek to buy out the rest of GrandVision,
which could ultimately value the Dutch company at more than EUR7.15
billion.
EssilorLuxottica, based in Paris, was created last year from the
EUR46.3 billion merger between Italian sunglasses maker Luxottica
and French lens manufacturer Essilor. That tie-up allowed the two
companies to access each other's markets of frames and lenses
without competing.
It didn't, however, address the competitive shortcomings of the
combined company's network of stores that offer optical services
and products ranging from eye testing to contact lenses. An
acquisition of GrandVision, a big optical retailer, is meant to
help fill that gap.
EssilorLuxottica operates more than 9,000 stores, with a large
presence in North America through brands like LenCrafters and
Pearle Vision, as well as in parts of Asia and Latin America.
However, with the exception of Italy, the company's retail network
in Europe is relatively small.
The acquisition of Grandvision would give EssilorLuxottica
access to about 5,300 stores across Europe that the Dutch company
operates as part of a global network of more than 7,200 outlets.
GrandVision oversees 30 retail banners including Vision Express in
the U.K. and Apollo in Germany.
GrandVision, meanwhile, could benefit from accessing
EssilorLuxottica's bigger retail network in the U.S. to reach a
broader customer base. The greater scale would also allow the
companies to pool their e-commerce offerings as they seek to
address growing consumer demand to shop online.
In European trading, GrandVision's stock was up 5.2% at EUR26.68
following news of the deal.
The acquisition is dependent on meeting various conditions
including antitrust clearance. EssilorLuxottica agreed to increase
its per-share offering by 1.5% to EUR28.42 from the current offer
of EUR28 if the deal with HAL doesn't close within 12 months. That
increase is recognition of the strong retail presence
EssilorLuxottica and GrandVision have in different countries and
the greater time regulators are taking to review transactions.
The deal comes at a tricky time for EssilorLuxottica, which
could raise questions among investors. The company is searching for
a new chief executive and is still integrating operations to wring
out the promised cost savings from the merger of Essilor and
Luxottica. In addition, analysts have questioned the fit between
GrandVision and EssilorLuxottica, as the latter has had a greater
focus on offering premium products.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
July 31, 2019 05:28 ET (09:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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