Ray-Ban Maker Looks to Further Deals After GrandVision Purchase
Ray-Ban Maker Looks to Further Deals After GrandVision Purchase
(Bloomberg) -- Eyewear giant EssilorLuxottica SA is already plotting its next move after making an $8 billion deal for Dutch retailer GrandVision NV and defusing an internal power struggle.
“GrandVision was just the first step,” Vice Chairman Hubert Sagnieres said in a telephone interview. “We won’t stop here and we have the means for more acquisitions.”
Investors can expect EssilorLuxottica to boost its retail and online operations as well as its lens and sunglass manufacturing operations, according to Sagnieres. The company is looking to Asia, Africa and Latin America for expansion.
The shares rose as much as 1.6% early Wednesday in Paris.
The purchase of GrandVision came only weeks after EssilorLuxottica smoothed over a leadership dispute that led analysts to worry about a culture clash at the owner of Ray-Ban and Oakley sunglasses.
Simmering rivalries from the combination of France’s Essilor and Italy’s Luxottica spilled into public view after the companies sealed their merger last year, with Chairman Leonardo Del Vecchio saying he wanted to appoint his deputy as chief executive officer and Sagnieres countering that the Italian was making false statements in an effort to seize control.
Squabble Ends
The company said in April it had begun looking for a new CEO in an effort to find a compromise between Del Vecchio and Sagnieres. It’s not in any rush to name a new chief as current CEOs Laurent Vacherot and Francesco Milleri are working well together, the vice chairman said.
“There’s been a lot of emotions, a lot of difficult moments because of various misunderstandings,” Sagnieres said. “All that is behind us now.”
The company’s bold M&A move so soon after the leadership squabble bodes well, according to Luca Solca, an analyst at Sanford C. Bernstein.
“We take the fact that it comes sooner than expected as a vote of confidence on the senior management organization evolution, which should allay market concerns on governance,” Solca wrote in a July 31 note.
EssilorLuxottica, which has a market value of about 53 billion euros ($59 billion) and net debt of 4.7 billion, has the financial firepower for more acquisitions, Sagnieres said. Moody’s Investors Service affirmed its A2 long-term issuer rating on the company after the GrandVision deal, saying EssilorLuxottica’s financing plans that include equity will mitigate any negative effect on the balance sheet.
Site Visits
The company is moving to break down barriers between the Italian and French camps that formed after the deal, according to Sagnieres. It’s arranging visits to sites around the world for top managers and board members, including Luxottica’s base in Agordo, Italy, and Essilor’s research and development center in Creteil, near Paris.
“These trips have been eye-openers,” Sagnieres said. “No more E and L on each side. Just one company.”
Unifying Essilor and Luxottica is essential as a first step to prepare to integrate GrandVision, the 64-year-old executive said. The company will give more details on cost-saving goals at a capital markets day in London on Sept. 25.
To contact the reporter on this story: Albertina Torsoli in Geneva at atorsoli@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Eric Pfanner
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