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Essilor-Luxottica merger complete

03/10/2018By Matthew Woodley
Essilor and Luxottica have successfully completed a €48 billion (AU$76.9 b) merger, 20 months after news of the deal first broke.

The combination of the world’s largest lens maker with the largest frame manufacturer will generate expected annual revenue in excess of €16 billion (AU$25.64 b), and employ nearly 150,000 people.

The merger was officially completed after Luxottica’s major shareholder, Delfin, contributed its entire 62.42% stake in the company to Essilor on October 1. This saw Essilor become the parent company of Luxottica, but in return Delfin received nearly 140 million new ordinary EssilorLuxottica shares through a capital increase.

“The creation of EssilorLuxottica is a defining moment in our fight to elevate the importance of good vision as both a basic human right and a key lever for global development.”
Hubert Sagnières, EssilorLuxottica

As a result, the company’s main shareholders are Delfin (38.93%, with voting rights capped at 31%) and EssilorLuxottica employees (4.9%). Delfin is the family-owned company of Luxottica founder Mr Leonardo Del Vecchio, who will become executive chairman of the newly formed entity.

“We are at the beginning of a new chapter in our history in which we so strongly believe, bringing together frames and lenses under the same roof and completing our vertically integrated business model,” Del Vecchio said.

“We will enhance the excellences of Luxottica and Essilor to improve the service level and offer consumers around the world ever better products that leverage on our most beloved brands with cutting-edge lens technologies. We will expand our offer and foster the development of our customers’ business and the entire industry.”

The remaining 56.8% of EssilorLuxottica’s shares are publicly held, while the company announced it would launch a Mandatory Exchange Offer for the remaining issued and outstanding Luxottica shares.

Essilor CEO Mr Hubert Sagnières has been named EssilorLuxottica’s executive vice chairman, a position with powers equal to those of the executive chairman, and both he and Del Vecchio will maintain their positions at Essilor and Luxottica respectively.

“The creation of EssilorLuxottica is a defining moment in our fight to elevate the importance of good vision as both a basic human right and a key lever for global development,” Sagnières said.

“EssilorLuxottica now has the means to give this important cause a much stronger voice and is in a position to grow the entire eyecare and eyewear industry thanks to its presence in all major segments, from lenses to frames to physical and online distribution.

Carl Zeiss

“Our commitment to foster innovation, enhance customer service and re-imagine the consumer experience will benefit all stakeholders. Moreover, the company’s mission will be strengthened by active and growing employee ownership, which is set to play a central role in the EssilorLuxottica governance model.”

According to EssilorLuxottica, all conditions related to the closing of the transaction have been satisfied. These include Essilor securing shareholder approval, the hive-down of substantially all Essilor activities to Essilor International (a wholly-owned subsidiary of Essilor), and clearance from all antitrust authorities whose authorisation was a condition precedent to the closing of the transaction.

Essilor International and Luxottica will maintain their respective boards of directors and an integration committee, led by Del Vecchio and Sagnières, will manage the integration of Essilor and Luxottica.

The new EssilorLuxottica board met on Monday and decided on the following:

•  The appointment of Ms Hilary Halper, Essilor chief financial officer, and Mr Stefano Grassi, Luxottica chief financial officer, as co-chief financial officers of the new combined entity.

•  The Nomination and Compensation Committee will be mandated before the end of January 2019 to lead the search process for a CEO.

•  The approval of the new rules of procedure of the EssilorLuxottica board of directors will be published on the website of EssilorLuxottica.

•  The approval of financial authorisations necessary for the combined company, Essilor International and Luxottica to operate their respective businesses.

EssilorLuxottica will present its first combined annual results during the first part of 2019.

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