European eyewear giants Luxottica and Essilor to merge

A new global eyewear giant is set to emerge as Italian frames maker Luxottica — home to popular brands Ray- Ban and Oakley — plans to join French lens manufacturer Essilor in an estimated $ 16 billion merger, the companies announced Monday.

Essilor International SA said it has reached a share exchange deal with Luxottica’s main shareholder, Delfin, to create a combined eyewear giant that will make both frames and lenses and have a strengthened position to address vision needs worldwide.

The combined companies would represent 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.

Shares of Luxottica closed up 8.25% at 53.65 euros in Paris trading after the announcement, while Essilor shares closed 11.85% higher at 114.20 euros.

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.

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