Daily Management Review

Luxottica and Essilor: € 46 billion-worth merger


01/16/2017


January 16, Essilor and Delfin companies announced signing of a merger agreement between Essilor and Luxottica Group. This is stated in Essilor’s press release.



EP Photo and Film via vimeo
EP Photo and Film via vimeo
The deal will create a key player on the market, active in all segments of the industry that has the most modern production facilities and an extensive customer service network.

"Finally ... two products that naturally complement each other, namely - frames and lenses - will be developed, manufactured and distributed under the same roof", - said the 81-year-old founder of Luxottica Leonardo Del Vecchio in a statement.

Staff of the combined company will exceed 140 thousand people; its products will be sold in more than 150 countries worldwide. Based on the companies reporting data for 2015, forecasted net revenues of the combined company will exceed 15 billion euros; total net EBITDA will amount to approximately 3.5 billion euros.

Preliminary analysis shows potential synergies in revenues and costs between 400 and 600 million euros in the medium term, with further growth.

It is also expected that the combined company will be able to provide a strong balance of payments and a high level of cash flow. This, in turn, will give the company a financial flexibility necessary to invest in further business development.

Under the deal, Delfin fully transfers its 62% stake in Luxottica to Essilor in exchange for shares of additional issue of Essilor. This part of the transaction is subject to approval by shareholders Essilor. Next, Essilor will make a mandatory public offer for exchange of all remaining outstanding shares of Luxottica. The shares can be exchanged for Essilor shares with the same exchange ratio, with Luxottica’s delisting as a result.

Eventually, Essilor will become a holding company and will change its name to EssilorLuxottica. All of its operating units will be allocated into a 100% subsidiary Essilor International.

After completion of the transaction, Delfin will remain the largest shareholder of EssilorLuxottica with a share of 31% to 38%.

January 15, 2017, Essilor’s Board of Directors unanimously approved the agreement with Delfin; on the same day Luxottica’s board unanimously decided that the transaction is in the best interest of the company.

The transaction is expected to be closed in the second half of the year 2017 after all necessary conditions are fulfilled.

Essilor is the world's leading developer and manufacturer of lenses for correction and protection of vision. Consolidated revenue in 2015 exceeded 6.7 billion euros. The company operates 32 businesses and 490 prescription laboratories, its products are available in more than 100 countries around the world 

Delfin Sarl is a holding company based in Luxembourg, specializes in investment activity.

Luxottica is a leader in development, manufacture and distribution of fashion, exclusive and sporting goods in the field of ophthalmic optics. In 2015, net revenues from sales amounted to about 9 billion euros.

Luxottica and Essilor, market value of about 24 billion euros and 22 billion euros respectively, began to explore possibilities for merging a few years ago. In September 2014, Luxottica’s representatives stated that a discussion of the transaction took place in 2013, but then the sides failed to reach an agreement due to a number of reasons, including issues of equity management.

source: reuters.com






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