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Essilor Luxottica Merger Confirmed
Mivision | 17 January 2017
The new company, to be known as EssilorLuxottica, will have a presence online as well as in stores, with brands including Ray Ban, Oliver Peoples, Persol, LensCrafters, Pearle Vision and Sunglass Hut.
The deal is one of Europe's largest cross-border tie-ups bringing together the Italian eyewear manufacturer Luxottica (valued at almost AU$34 billion) with French ophthalmic lens manufacturer Essilor, (valued at over AU$31 billion). The combined market capitalisation is almost AU$65 billion.
Luxottica has a global market share of 14 per cent in eyewear, while Essilor has 13 per cent, according to Euromonitor. Their combined revenues totalled nearly AU$23 billion in 2015 and together they employed some 140,000 people.
Luxottica's 81-year old founder and executive chairman Leonardo Del Vecchio will become CEO and executive chairman of the new entity. Essilor's 61-year-old Chairman and Chief Executive Hubert Sagnières will be deputy CEO and vice executive chairman. The arrangement will give both men equal power.
The deal settles concerns over succession plans at Luxottica, which has experienced several changes in management since the departure of long standing CEO Andrew Guerra in 2014, reportedly after a disagreement with the founder Mr. Del Vecchio. His successor, Enrico Cavatorta, left after only six weeks into the job, again reportedly due to differences with the founder. Following the departure of Adil Mehboob-Khan – the company’s third chief executive in 17 months – Mr. Del Vecchio took on more executive powers, stepping up investments to boost Luxottica's retail network and increase its lens manufacturing business.
Mr. Del Vecchio, who is Italy’s second richest person, grew up in a Milanese orphanage and learnt metalwork in a tool shop, before founding Luxottica in 1961. He has six children, three from his first marriage, one from his second (current) marriage and two others and, according to sources was determined to protect the business from any family feuds after his death. Share holder changes to Luxottica’s family holding company Delfin and the merger with Essilor could help him achieve this.
Long Held Discussion
A merger between Essilor and Luxottica has been in discussion for four years however it was squashed in May 2016 when Luxottica’s Chief Executive Massimo Vian issued a statement (published at mivision.com.au) to shareholders denying any plans to do so. “As of today there are no discussions with France's Essilor or Germany's Zeiss over possible tie-ups… both companies are Luxottica's suppliers and that is the only relationship we have with them”.
However the statement informed that Luxottica had commenced construction on three new laboratories for the production of ophthalmic lenses within the Group's main distribution centres, which would allow it to integrate lenses and frames at the right phase of the cycle, optimising the level of service for its optical retail brands.
The fast-growing eyewear market was valued at around $100 billion in 2015, according to U.S.-based market consulting company Grand View Research. It is expected to keep expanding at a healthy pace in coming years because of an aging population as well as increasing awareness about eye care and vision problems, with Latin America and Asia seen as key markets for growth.
the deal is one of Europe's largest cross-border tie-ups bringing together the Italian eyewear manufacturer Luxottica (valued at almost AU$34 billion) with French ophthalmic lens manufacturer Essilor, (valued at over AU$31 billion)