Newsmaker - Luxottica's merger helps Del Vecchio manage family risks

Brittany BishopJan 17, 2017

Essilor said the merger is created to meet growing global demand for corrective lenses, sunglasses and luxury frames.

The $49 billion deal, expected to close in the second half of the year, will create "EssilorLuxottica", with total revenue of about $16 billion and more than 140,000 employees. Delfin is owned by Luxottica's founder and executive chairman Leonardo Del Vecchio.

A year ago Luxottica announced the departure of its third chief executive in 17 months when Adil Mehboob-Khan, a former Procter & Gamble executive, stepped down and Del Vecchio tightened his grip on the group by taking on executive powers.

"The strategic rationale is strong", JPMorgan Cazenove analysts said in a note, adding that the deal defuses the risk of growing competition between two groups that had been encroaching on each other's areas of expertise in recent years, with Essilor buying online retailers and Luxottica investing in lens manufacturing.

The all-share deal is one of Europe's largest cross-border tie-ups and brings together Luxottica, the world's top spectacles maker with brands such as Ray-Ban and Oakley, with leading lens manufacturer Essilor.

It will see the creation of the global leader in all things optical - frames lenses, equipment, testing, brands and retailing - and included in it as a small component will be Australia's OPSM, as well as its US-based Sunglass Hut chain.

Investor reaction was eye-popping: Shares in Luxottica surged about 9%, while Essilor soared about 14%.

Del Vecchio, a child orphan who spent some of his childhood in a poorhouse, is Italy's richest man, worth more than €20 billion. Essilor was up by more than 12 percent and Luxottica was up by more than 7 percent at 11.30 am London time.

Shares jumped in both Luxottica, which is based in Milan, and Essilor, headquartered near Paris.

Del Vecchio's Delfin agreed to contribute its 62 percent stake in Luxottica to Essilor in exchange for stock in the newly created group that will be listed in Paris.

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. Aside from its ownership of the major brands above, it also owns Sunglasses Hut and has the licence for the likes of Burberry and Ralph Lauren, Business Insider reports.

The biggest shareholder in the new company will be the Del Vecchio family. Essilor will then make a mandatory offer for the remaining Luxottica stock at the same exchange ratio.

Related Articles:



« Previous article
Next article »


Popular Pages

Former England manager Taylor dies
Taylor became England boss in 1990 but resigned in 1993 after the team failed to qualify for the 1994 World Cup. Graham came into the dressing room afterwards and thanked me for the game, which he thoroughly enjoyed.

Defense Nominee James Mattis Breaks with Trump over Russian Federation
Unceremoniously forced out of the Pentagon by the Obama administration over his opposition to the Iran nuclear deal, Gen. Of great concern is Mattis' ideas on the service of LGBT members.

Takata pleads guilty to knowingly selling faulty airbags
McQuade declined to put a percentage on the chances of getting them back to the US , but said the chances are "pretty good". Prior to today's indictments, Takata has agreed to pay up to $200 million in civil penalties in a deal with the NHTSA .

Jallikattu conducted in Cuddalore despite SC ban
Jallikattu is a practice, more than 2000 years old, meant to embrace the bull during the ceremonial procession of Pongal festival. Tamil Nadu will have to do without Jallikattu - the hugely popular bull-taming sport - during Pongal this weekend.

Carroll screamer inspires West Ham to victory
The playmaker was rewarded with a new West Ham contract in February of previous year , meaning he is tied to West Ham until 2021. The West Ham number nine got up well to head at goal, but Tomkins rose bravely to deflect his effort behind for a corner.

YouTube Users Will No Longer Be Able To Donate To Creators
As of now, the tool is still in beta testing and the guinea pigs include Great Library , iHasCupquake , and Alex Wassabi . The viewer can select an amount by dragging a slider to the desired value, then optionally enter a message and fire away.

Christmas clothing cheer for M&S
It cautioned over a knock-on hit to fourth quarter figures due to the timing of sales as well as a later Easter this year. He added the group would plough on with its restructure plans "against the background of uncertain consumer confidence".

Floyd Mayweather Says Conor Mcgregor Offered £12m To Fight Him
And we'll talk about Pay Per View and a certain number. "Conor's last two pay-per-views did 1.3 million and 1.5 million buys". Furthermore, in his last fight against Andre Berto in September 2015, Mayweather was guaranteed a purse of $32 million.

DPS: Trooper shot after responding to crash near Tonopah
Andersson was shot in the shoulder and chest, after such time a physical fight ensued between him and the suspect. When he arrived at the scene, Andersson found a flipped auto and a woman who had been ejected during the crash.

SpaceX Successfully Returns To Space
The launch's success Saturday was made even sweeter by a smooth return landing for the Falcon 9 rocket's first stage booster. EST (1754 GMT) on Saturday, and successfully launched all the satellites in Earth's low-orbit 59 minutes after the lift off.