- Title: Luxottica and Essilor agree 46 billion euro merger to create eyewear giant
- Date: 16th January 2017
- Summary: LONDON, ENGLAND, UK (JANUARY 16, 2017) (REUTERS) (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "It really looks at first glance as though the minorities of Luxottica have got a rather raw deal. I mean it is an all-paper deal and the majority owner of Luxottica is of course going to retain effective control of the merged company. But if you look at the exchange parity, it's actually a 5 percent discount to the last trading price of Luxottica. So there's no doubt there's some industrial logic to this merger, all along the value chain. The merged company will cement its global leadership in the eyewear market. I think it'll have something like a 27 percent global market share. Johnson & Johnson next player down - less than 4 percent. So that is potentially good business in terms of margins. But as I said the minorities are certainly not being bid at a reasonable price. They'll be compulsorily bought out, and at which point in time you'll have Leonardo Del Vecchio effectively in a position to hoover up. So good for him, maybe not so good for minorities."
- Embargoed: 30th January 2017 12:54
- Keywords: eyewear Luxottia Essilor merger glasses lenses spectacles Ray-Ban Oakley
- Location: UNKNOWN LOCATION / LONDON, ENGLAND, UK
- City: UNKNOWN LOCATION / LONDON, ENGLAND, UK
- Country: Italy
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA0025ZBZ24T
- Aspect Ratio: 16:9
- Story Text:Italy's Luxottica and France's Essilor have agreed a 46 billion euro ($49 billion) merger to create a global powerhouse in the eyewear industry with annual revenue of more than 15 billion euros, they said in a statement on Monday (January 16).
The deal, one of Europe's largest cross-border tie-ups, brings together Luxottica, the world's top spectacles maker with brands such as Oakley and Ray-Ban, with Essilor, the world's leading manufacturer of ophthalmic lenses.
Shares in both companies were up 14 percent at 0814 GMT.
By merging, the companies will be better positioned to take advantage of strong demand in a $95 billion market expected to achieve continued growth because of an aging global population and increasing awareness about eye care in Asia and Latin America.
The companies said the deal is expected to bring annual revenue benefits and cost savings in the range of 400 million euros to 600 million euros in the medium term.
Del Vecchio, who returned to the helm of Luxottica two years ago after taking a back seat for the previous decade, will be CEO and executive chairman of the merged EssilorLuxottica, which will be listed in Paris.
Del Vecchio will take a stake of between 31 percent and 38 percent in the merged group through his family holding Delfin, becoming the biggest shareholder. Voting rights will be capped at 31 percent.
The companies expect rapid growth in the global eyewear market, saying that at least 2.5 billion people in the world still suffer from uncorrected vision problems.
But some analysts believe minority shareholders may lose out.
"It really looks at first glance as though the minorities of Luxottica have got a rather raw deal. I mean it is an all-paper deal and the majority owner of Luxottica is of course going to retain effective control of the merged company. But if you look at the exchange parity, it's actually a 5 percent discount to the last trading price of Luxottica. So there's no doubt there's some industrial logic to this merger, all along the value chain. The merged company will cement its global leadership in the eyewear market. I think it'll have something like a 27 percent global market share. Johnson & Johnson next player down - less than 4 percent. So that is potentially good business in terms of margins. But as I said the minorities are certainly not being bid at a reasonable price. They'll be compulsorily bought out, and at which point in time you'll have Leonardo Del Vecchio effectively in a position to hoover up. So good for him, maybe not so good for minorities", BGC Partners Market Analyst Mike Ingram said. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2017. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
