Not from Mediaset nor from Fincantieri: the news of the century in the financial relations between Italy and France comes from Luxottica. The group led by Leonardo Del Vecchio, absolute lord in the world eyewear market with the Ray-Ban, Oakley and Sunglass Hut brands, has announced the merger with the French Essilor, itself the first manufacturer of lenses on the planet. The value of the operation is around 50 billion euros, a sum that characterizes the merger as one of the most important transnational mergers ever.
THE FINANCIAL DETAILS OF THE AGREEMENT
Del Vecchio, 81, will serve as CEO and executive chairman, while the current chairman and CEO of Essilor, 61-year-old Hubert Sagnières, will be vice-CEO and executive vice-chairman, but with the same powers as the executive chairman and chief executive officer. But the successor of the Italian industrialist, who in recent years has tried and rejected three directors (starting with Andrea Guerra), will be French, as the current trend dictates.
The operation provides that Delfin sells its entire stake in Luxottica to Essilor, equal to 61,9%. For each share of the Italian company, the Del Vecchio holding will obtain 0,461 newly issued shares of the French group. After that, with the same exchange, Essilor will launch a mandatory public exchange offer (imposed by Italian law) on the other Luxottica shares, which will thus say goodbye to the Milan Stock Exchange.
At that point Essilor – after having moved all its operating activities into a wholly owned company, which will take the name “Essilor International” – will become a holding company with the new name of “EssilorLuxottica”, of which Delfin will be the first shareholder with a share between 31% and 38%. Closing is expected in the second half of 2017.
The Board of Directors of EssilorLuxottica will be composed of sixteen directors: eight appointed by Essilor (Sagnières, two employee representatives, one representative of Valoptec and four independent directors) and eight by Delfin (Del Vecchio, three representatives of Delfin and four independent directors) .
THE NUMBERS OF THE NEW GROUP
The new eyewear giant will have more than 140 thousand employees and will sell in over 150 countries. Based on the two companies' 2015 annual results, the new group would net revenues of over 15 billion e a combined net ebitda of approximately 3,5 billion. And a preliminary analysis shows that the new group could generate in the medium term synergies of revenues and costs for an amount between 400 and 600 million euros, with an acceleration in the long term.
Thanks to this operation, “an integrated player dedicated to vision care and to creating a superior experience for the consumer is born – reads the press release of the Italian group – Together, Essilor and Luxottica will be in a better position to offer a response to the needs related to the vision of 7,2 billion people, 2,5 billion of whom still do not have access to vision correction.
THE FUTURE OF THE STOCK, THE REACTION OF THE STOCK MARKET
According to the Financial Times, which anticipated the news, the new giant will be listed in Paris. From the point of view of Piazza Affari, this is the only weak point of the agreement, which for the rest removes any doubts about the governance of the Luxottica group, until this morning the only Italian company leader in a sector.
In any case, the market reaction she is enthusiastic: by mid-morning, the Luxottica share gained almost 8%, to 53,45 euros per share, posting the best increase in the Ftse Mib. In the same minutes, Essilor leaps by more than 14% on the CaC in Paris, to 116.45 euros.
THE POSITION OF THE BOD AND THE MARKET OBJECTIVES
On Sunday, January 15, the Essilor Board of Directors unanimously approved the agreement, judging it “consistent with the best interests of shareholders, employees and other stakeholders,” and entered into dialogue with employee representatives. The Board of Directors of Luxottica, which was held on the same day, also unanimously established that the transaction is in the best interests of Luxottica and shared the strategic reasons for the merger with Essilor.
The first industrial objective of the new group is to consolidate its leadership on the Asian market, the most promising in terms of prospects. The agreement, the result of a long negotiation started in secret by the French 3-4 years ago, will allow Essilor to grow in the retail segment.
THE COMMENT OF THE PROTAGONISTS: DEL VECCHIO AND SAGNIERES
“With this operation – he comments Del Vecchio – my dream of giving life to a champion in the optical sector that is totally integrated and excellent in every part comes true. We have known for some time that this was the right solution but only now have the conditions that made it possible matured. We will continue to invest in Italy and France, we want to be a European champion who keeps his roots strong".
Hubert Sagnieres, president and CEO of Essilor, explains instead that "the project is based on a simple motivation: to better respond to the needs of an immense world population related to vision correction and protection, by uniting two large companies, one dedicated to lenses and the 'another to the frames”.
