LUXOTTICA TO MERGE WITH ESSILOR TO CREATE $16 BILLION EYEWEAR GIANT

Global premium eyewear company Luxottica Group has signed an agreement with prominent lens manufacturer Essilor to merge the two companies in order to better serve the needs of their consumers.

Under the terms of the agreement, Essilor would become a holding company with the new name “EssilorLuxottica” via a consolidation of all of its operating activities into a wholly-owned company, to be called Essilor International, and the contribution by Delfin of its Luxottica shares.

This transaction would allow the combined group to better seize growth opportunities resulting from strong demand in the eyewear market, driven by the increasing need for corrective and protective eyewear and the appetite for strong brands. The combination would create a key player, operating across all segments of the eyewear industry. The new entity would leverage state-of-the-art production capabilities and widespread distribution networks to better serve clients and deliver value to all stakeholders.

Together, Luxottica and Essilor would have more than 140,000 employees and sales in more than 150 countries. Based on the companies’ 2015 results, the new company would have posted combined net revenues of more than €15 billion (approximately $16 billion) and combined net EBITDA of approximately €3.5 billion.

Based on a preliminary analysis, the combined group is expected to progressively generate revenue and cost synergies ranging from €400 million to €600 million in the medium term and accelerating over the long term.

It will also benefit from a robust balance sheet and strong cash flow generation, giving it the financial flexibility to invest in its future growth both externally and internally.

“Our project has one simple motivation: to better respond to the needs of an immense global population in vision correction and vision protection by bringing together two great companies, one dedicated to lenses and the other to frames,” said Hubert Sagnières, chairman and CEO of Essilor. “With extraordinary success, Luxottica has built prestigious brands, backed by an industry state-of-the-art supply chain and distribution network. Essilor brings 168 years of innovation and industrial excellence in the design, manufacturing and distribution of ophthalmic and sun lenses. By joining forces today, these two international players can now accelerate their global expansion to the benefit of customers, employees and shareholders as well as the industry as a whole.”

“With this agreement my dream to create a major global player in the eyewear industry, fully integrated and excellent in all its parts, comes finally true,” added Leonardo Del Vecchio, executive chairman of Luxottica Group. “It was some time now that we knew that this was the right solution but only today are there the right conditions to make it possible. The marriage between two key companies in their sectors will bring great benefits to the market, for employees and mainly for all our consumers. Finally, after fifty years, two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof.”