EssilorLuxottica sets sights on retail dominance with $8 billion GrandVision deal
today Jul 31, 2019
EssilorLuxottica is buying Dutch opticians group GrandVision for up to 7.2 billion euros ($8 billion) in cash to take control of thousands of stores where it sells spectacles and lenses.
The deal marks a new milestone for EssilorLuxottica, which was formed last year from the merger of French lens maker Essilor and Italian eyewear group Luxottica, but which has been hit by disputes over who should run the group.
GrandVision, whose chains include Vision Express in Britain and For Eyes in the United States, would give EssilorLuxottica control of more than 7,000 outlets across the world where it already sells brands including Varilux lenses and Ray-Ban sunglasses.
But the deal is likely to face intense scrutiny by competition regulators. The European Union only approved the 48-billion-euro merger of Essilor and Luxottica after a long study.
“EssilorLuxottica is looking here to address all the segments of the market, from glasses with Essilor to spectacles with Luxottica and retail with GrandVision,” said Gregoire Laverne, a fund manager with Roche Brune Asset Management.
“There are synergies to be expected given the group will be able to push its products through GrandVision stores. But the deal poses a real challenge for EssilorLuxottica which is struggling with governance issues,” he added.
EssilorLuxottica said it had agreed to buy a 76.72% stake in GrandVision from Dutch investment company HAL NV for 28 euros per share. The price could rise to 28.42 euros if the deal is not closed within a year, and the terms value the whole of GrandVision at up to 7.2 billion euros.
GrandVision’s management and supervisory boards support the deal, which will be followed by a public offer for all the outstanding GrandVision shares after completion, EssilorLuxottica said.
Shares in GrandVision, which were floated at 20 euros apiece in 2015, were up 5.2% to 26.68 euros at 0930 GMT. EssilorLuxottica shares were up 3.5% at 122.40 euros.
“With GrandVision we will be able to develop our retail network, finally extended throughout the geographies, and fully enable our multichannel and digital platforms,” said EssilorLuxottica executive chairman Leonardo Del Vecchio.
In a call with analysts, Essilor chief executive Laurent Vacherot said he expected the transaction to contribute to group earnings per share growth a year after completion.
GrandVision has stores in more than 40 countries across Europe, Asia, North America and Latin America, according to its website, and employs more than 37,000 staff. Its outlets attract more than 150 million customers each year, it says.
EssilorLuxottica’s current retail brands include David Clulow opticians, Sunglass Hut and Spectacle Hut.
At the time of Essilor’s merger with Luxottica, rivals and some opticians expressed concern that the combined group might persuade opticians to buy eyewear and lenses as a package, squeezing out smaller players.
EssilorLuxottica announced the GrandVision deal as it reported a rise in second-quarter results and confirmed its 2019 financial targets.
GrandVision also posted higher second-quarter sales year-on-year, although its adjusted profit was flat at constant exchange rates.
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