17 January, 2017
A new world eyewear giant is set to emerge as Italian frames maker Luxottica - home to popular brands Ray-Ban and Oakley - plans to join French lens manufacturer Essilor in an estimated $16 billion merger, the companies announced Monday. Del Vecchio will be the single largest shareholder with his Delfin holding company owning a stake of between 31 and 38 percent.
The companies added that the new entity would have a combined revenue of more than 15 billion euros, and that major cost-savings would result from the transaction. Essilor's chairman and chief executive, Hubert Sagnières, will become his deputy.
"Finally, after 50 years, two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof", Del Vecchio said in a statement.
The management upheaval and uncertainty over who could take over at Luxottica, together with a slowing US market, have weighed on its shares, which before the merger was announced on Monday were trading 27 percent off their 2015 peak.
The combined group will have a market capitalisation of around 46.2 billion euros ($49 billion), based on both companies' closing share prices on Friday.
French company Essilor will offer mandatory exchange offer to Luxottica shareholders.
The merger aims to take advantage of the fast growing demand in the eyewear market, which is being propelled by increases in corrective glasses, as well as a growing taste for sunglasses.
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Two other people familiar with the company said Del Vecchio wanted to shield Luxottica from possible squabbles among his heirs.
The merger is expected to create synergies that will save between 400 million and 600 million euros a year in the medium term.
The merged EssilorLuxottica will have 140,000 staff and will be headquartered and listed in Paris.
Del Vecchio, who returned to the helm of Luxottica two years ago after taking a back seat for the previous 10 years, will be CEO and executive chairman of the merged group.
The merger can be expected to substantially shake up the global eyewear industry, particularly as the combined company operates in over 150 countries.
Essilor's Sagnieres said: "Our project has one simple motivation: to better respond to the needs of an vast global population in vision correction and vision protection". Mediobanca SpA advised Delfin, while Citigroup Global Markets and Rothschild worked for Essilor.