Luxottica and Essilor sees eye-to-eye in merger

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

The new business, with annual sales worth nearly €16bn, more than 140,000 employees and sales in over 150 countries, is expected to provide a growth platform "ideally positioned to seize future opportunities".

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.

Bloomberg said the deal is the largest ever acquisition of an Italian company by a foreign buyer.

Under the proposed terms, the merger will see Luxottica, the world leading consumer eyewear group and owner of Ray-Ban, Oakley and retailer, Sunglass Hut, merging with Essilor, the world leading manufacturer of lenses.

According to Euromonitor, Luxottica has a global market share of 14% in eyewear and Essilor has 13%, putting them far ahead of other competitors.

Del Vecchio, a child orphan who spent some of his childhood in a poorhouse, is Italy's richest man, worth more than €20 billion.

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The merged EssilorLuxottica will have 140,000 staff and will be headquartered and 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. Luxottica founder Leoanrdo Del Vecchio will be executive chairman and CEO, as well as the largest single shareholder with a 30% slice of the combined company.

The boards of Essilor and Luxottica approved the merger in meetings Sunday. The French lens maker will launch a mandatory exchange offer on all remaining Luxottica shares at the same ratio, with the aim of delisting Luxottica's shares.

After staying out of business operations for almost a decade, Del Vecchio recently returned as CEO of the company.

Widely respected in Italy, Del Vecchio is credited with turning Luxottica into a global player with 7,800 shops in 150 countries by striking licensing deals with the likes of Giorgio Armani and Chanel and turning spectacles into a fashion accessory.

Mediobanca advised Delfin on the merger, with Essilor advised by Rothschild and Citi.

Luxottica and Essilor, which have a market value of around 24 billion euros and 22 billion euros respectively, had been exploring a tie-up for years.

  • Rita Burton