European eyewear brands Luxottica and Essilor announced on Monday that the two companies are merging to create a global powerhouse in the eyewear industry in a €46 billion ($49 billion) deal, or 0.461 per share and expected to close by the second half of 2017.
Through the merger, both companies will be situated in a more advantageous position in the eyewear market with a strong demand expected to reach $95 billion through the continuous growth. The growth experienced by the industry is partly affected by the increasing awareness about eye care both in Asia and Latin America.
On the agreement between the two companies, Delfin, the family holding company of the Luxottica founder and executive chairman, Leonardo Del Vecchio, will contribute its 62% stake in Luxottica in exchange for shares in Essilor, making Delfin the biggest shareholder in the company. Delfin would then own between 31% and 38% of the shares of EssilorLuxottica.
“By joining forces today, these two international players can now accelerate their global expansion to the benefit of customers, employees and shareholders as well as the industry as a whole, “ said Essilor chairman and chief executive Hubert Sagnieres in a news release.
Luxottica is an Italian eyewear company and the world’s largest eyewear company, best known for its Oakley and Ray Ban brands, while Essilor is a French company that produces ophthalmic lenses and ophthalmic equipment.
According to both companies, the merger is expected to generate around annual benefits and cost savings around €400 - €600 million in the medium term.
The combination of the two companies will have net revenue of €15 billion and combined net EBITDA around €3.5 billion, with more than 140,000 employees and sales in more than 150 countries.
“With this agreement my dream to create a major global player in the eyewear industry, fully integrated and excellent in all its parts, comes finally true,” said Del Vecchio. “The marriage between two key companies in their sectors will bring great benefits to the market, for employees and mainly for all our customer,” he added.
Essilor Board of Directors approved of the agreement with Delfin, with the deal being in line with the company’s goals and with the best interests of the shareholders, employees and other stakeholders.
Del Vecchio will serve as the Executive Chairman and CEO of EssilorLuxottica, while Essilor Chairman and CEO Sagnieres will assume the position of Executive Vice-Chairman and Deputy CEO. Del Vecchio and Sagnieres will retain their previous positions of Executive Chairman of Luxottica and Chairman and CEO of Essilor Internationsal, respectively.
With the announcement of the news, Essilor shares rose by 19%, while Luxottica climbed 15% in the Monday trading.
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