EssilorLuxottica and GrandVision deal confirmed

EssilorLuxottica has confirmed it will acquire a controlling interest in Dutch multi-national eyewear retailer GrandVision, vastly expanding the company’s retail presence.

The deal, valued by financial analysts to be worth euro 7.2 billion (AU$11.6 billion), will see EssilorLuxottica increase its footprint by over 7,200 stores and 37,000 employees across 40 countries.

GrandVision’s portfolio of retail outlets includes Vision Express, Synoptik, Pearle and GrandOptical, among several others.

As per the terms of the agreement, EssilorLuxottica will acquire for euro 28 (AU$46.39) per share Hal Optical Investments, a subsidiary of HAL Holding which owns 76.72% of GrandVision. This will increase by 1.5% to euro 28.42 (AU$47.09) per share if the transaction is not closed within 12 months.

“Following the creation of EssilorLuxottica, which I strongly pursued, the acquisition of GrandVision represents the realisation of a vision that has guided my actions and the growth of Luxottica over all these years,” Mr Leonardo Del Vecchio, executive chairman of EssilorLuxottica, said.

“With GrandVision we will be able to develop our retail network, finally extended throughout the geographies, and fully enable our multichannel and digital platforms. We will raise the quality of in-store experience for products, brands and services for the benefit of all consumers and our wholesale customers.”

Mr Hubert Sagineres, executive vice chairman of EssilorLuxottica, also welcomed the deal.

“This acquisition is another step toward our ambition to eradicate poor vision in the world before 2050. Following the combination with Luxottica, it’s a milestone in our vision of reshaping the optical industry with the aim to provide all consumers of the world a better optical experience with higher quality eyewear.

“We look forward to welcoming the 37,000 ployees of GrandVision to the growing EssilorLuxottica family. Together, we will have an even stronger voice to champion better vision everywhere in the world.”

It follows a tumultuous period for the recently merged EssilorLuxottica. Del Vecchio, founder of Luxottica, and Sagineres, former CEO of Essilor, clashed publicly over the company’s leadership.

Following legal threats from both sides, in March a truce was brokered and the search for a CEO extended beyond the preferred candidates of Del Vecchio and Sagineres.Mr Stephan Borchert, GrandVision CEO, said the deal would offer new opportunities to the business.

“Furthermore, it will create a truly global eyecare and eyewear company that is ideally positioned to capture changing consumer needs and behaviours, and provide its customers with a high quality, optical omni-channel customer experience.”The transaction is still subject to various regulatory approvals.

Both EssilorLuxottica and GrandVision also announced their financial results following the deal.

EssilorLuxottica reported a net profit of euro 1.1 billion (AU$1.8 b) for the six month period ending 30 June 2019, up 6.8% from the previous year. Revenue increased 7.3% at current exchange rates and 3.9% at constant exchange rates, compared to first-half 2018 pro forma revenue, to euro 8.8 billion (AU$14.2 b).GrandVision reported its revenue increased by 7.3% at constant exchange rates to euro 2 billion (AU$3.2 b) over the first half of last year.

Adjusted earnings before interest, tax, depreciation and amortisation increased 2.4% compared to the first half of 2018, to euro 486 million (AU$790 m).

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