Luxottica and Essilor in 46 billion euro merger to create eyewear giant

Mon Jan 16, 2017 9:34am EST
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By Valentina Za and Sudip Kar-Gupta

MILAN/PARIS (Reuters) - Italy's Luxottica LUX.MI and France's Essilor (ESSI.PA: Quote) have agreed a 46 billion euro ($49 billion) merger to create a global eyewear powerhouse with annual revenue of more than 15 billion euros.

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.

"Finally ... two products which are naturally complementary -- namely frames and lenses -- will be designed, manufactured and distributed under the same roof," Luxottica's 81-year-old founder Leonardo Del Vecchio said in a statement on Monday.

Shares in Luxottica were up by 8.6 percent at 53.80 euros by 1405 GMT (9:05 a.m. ET), with Essilor up 12.2 percent at 114.60 euros.

The merger between the top players in the 95 billion eyewear market is aimed at helping the businesses to take full advantage of expected strong demand for prescription spectacles and sunglasses due to an aging global population and increasing awareness about eye care.

Jefferies analysts estimate that the market is growing at between 2 percent and 4 percent a year, while Luxottica and Essilor say that at least 2.5 billion people in the world still suffer from uncorrected vision problems.

The deal also removes -- for now at least -- uncertainty over succession at Luxottica, which has lost three CEOs since 2014 because of rifts with Del Vecchio.

"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.   Continued...

FILE PHOTO:  Sunglasses from Ray Ban, a Luxottica owned brand, are on display at an optician shop in Hanau, Germany, March 18, 2016.    REUTERS/Kai Pfaffenbach/File Photo