Two of the biggest players in the $121 billion global eyewear market, Luxottica and Essilor, will team up in a $49 billion all-share deal.
Luxottica is a frame manufacturer and retailer with a network of 7,800 retail stores including LensCrafters and Pearle Vision in North America and Sunglass Hut worldwide. Its brand portfolio features brands such as Ray-Ban, Oakley, Oliver Peoples and Alain Mikli. Luxottica employs more than 80,000 people around the world and had net sales of approximately 9 billion Euros in 2015. Essilor is a lens manufacturer of brands including Varilux, Crizal and Transitions. The company’s 2015 revenues were 6.7 billion Euros. Essilor employs approximately 61,000 people worldwide.
“Finally, after 50 years, two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof,” noted Luxottica Group Chairman Leonardo Del Vecchio in a statement.
“Essilor brings 168 years of innovation and industrial excellence in the design, manufacturing and distribution of ophthalmic and sun lenses,” added Hubert Sagnières, Chairman and CEO of Essilor. “By joining forces today, these two international players can now accelerate their global expansion.”
The good news is the combined company could report net revenue of more than 15 billion Euros, and the merger is expected to generate revenue and cost synergies of 400 million to 600 million Euros in the medium term. But the bad news could be an unwieldy management structure, with two strong executives sharing power.
Del Vecchio will serve as Executive Chairman and CEO of the newly christened EssilorLuxottica. Sagnières will take the titles of Executive Vice-Chairman and Deputy CEO but will have equal authority as Del Vecchio. The new company’s board of directors will consist of 16 members, equally split between Essilor and Luxottica.
The global eyewear market is growing at between 2% to 4% annually due to an aging population requiring vision correction. But both Luxottica and Essilor have been grappling with slowing sales growth due to weakness in the North American market and competition from less expensive rivals and online distribution challenges, according to Reuters.