The world’s largest eyewear company pursues growth through acquisition
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The world’s largest eyewear company pursues growth through acquisition

EssilorLuxottica, the world’s largest eyewear company, which was formed last year in a bid to revolutionise the industry, is looking to pursue further growth through the acquisition of Dutch retailer GrandVision. The acquisition comes hot on the heels of a power dispute at the French-Italian giant, which has seen head honchos at from Essilor and Luxottica battle it out over who will have ultimate control. As the dust has settled, a compromise has been reached, and the company will look for a CEO from outside.

EssilorLuxottica’s share price has appreciated by 10% over the past three months

Essilor July 24

Source: Yahoo Finance

GrandVision is no slouch in the size department itself. If the deal is completed, it will see a company will revenues of 16.2 billion euros absorb a company with sales of 3.7 billion euros and more than 7,000 stores in 40 countries. However, time will tell whether the talks yield fruit. HAL Holding, which owns 76.7% of GrandVision, confirmed that talks were ongoing, but stressed it was early days, saying: “no agreement has yet been reached and no assurance can be provided that these discussions will lead to such an agreement.”

People close to EssilorLuxottica, which owns top brands like Ray-Ban and Oakley, have allegedly told the Financial Times that the talks with GrandVision prove the efficacy of the recent cease fire between chiefs in Italy and France. This is good news for investors, who will hope to see the company no longer stymied by power struggles. Jefferies analysts think this is already apparent, writing in a recent note: “a lack of incremental noise on governance has allowed the market to focus on EssilorLuxottica’s top-down merits.”

The company has said it expects to find a new CEO before the end of next year, and will report earnings at the end of this month.

Disclosure

Dominion holds EssilorLuxottica in its Global Trends Luxury Fund.


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