Luxottica, Essilor Plan Huge Eyewear Merger

A global eyewear giant is coming into focus with the proposed merger of Italian frames maker Luxottica — home to popular brands Ray-Ban and Oakley — and French lens manufacturer Essilor. The deal would result in an estimated $16 billion merger, the companies announced Monday.

Essilor International SA reportedly reached a share exchange deal with Luxottica’s main shareholder, Delfin, to create a combined eyewear giant that will make both frames and lenses. The combined companies would result in an eyewear giant with a roughly $50 billion market capitalization. They would have about 27% of the market, easily topping competitors such as Johnson & Johnson and Safilo Group, The Wall Street Journal reported, citing data from Euromonitor.

The statement said the new company would have combined annual revenues of more than 15 billion euros ($16 billion), 140,000 employees and sales in more than 150 countries, including the U.S. Essilor said the merger is designed to meet growing global demand for corrective lenses, sunglasses and luxury frames.

The deal calls for Delfin to contribute its approximately 62% stake in Luxottica to Essilor in return for newly-issued Essilor shares to be approved at an expected meeting of the company’s shareholders. The exchange ratio would be 0.461 Essilor shares for each Luxottica share, the companies said.

Essilor would then make a mandatory public exchange offer, in compliance with Italian law, to acquire all of the remaining and outstanding shares of Luxottica at the same exchange ratio. Luxottica’s shares would be delisted afterward, the companies said.

Essilor would become a holding firm called EssilorLuxottica. It would wholly own a new company called Essilor International as part of the deal.

Following completion of the transaction, Delfin would own 31% to 38% of the shares of EssilorLuxottica, and would be the holding firm’s largest shareholder. The voting rights of any shareholder of EssilorLuxottica would be capped at 31%.

The transaction is subject to consultation procedure according to French law, the companies said. Both firms’ boards unanimously approved the merger.

Essilor and Luxottica projected the newly combined company would progressively generate revenue and cost synergies ranging from roughly $424 million to $636 million in the medium term.

The deal is expected to close in the second half of 2017.


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