EL Essilorluxottica

By Ben Dummett 

EssilorLuxottica SA agreed Wednesday to buy control of European rival GrandVision NV for about EUR5.49 billion ($6.1 billion), in a move that would further cement the Ray-Ban maker's global position as the leading manufacturer and retailer of eyewear and lenses.

The deal comes after EssilorLuxottica disclosed earlier in July its talks to acquire the almost 77% stake from HAL Holding NV, a holding company. EssilorLuxottica said that after completing the HAL transaction it would seek to buy out the rest of GrandVision, which could ultimately value the Dutch company at more than EUR7.15 billion.

EssilorLuxottica, based in Paris, was created last year from the EUR46.3 billion merger between Italian sunglasses maker Luxottica and French lens manufacturer Essilor. That tie-up allowed the two companies to access each other's markets of frames and lenses without competing.

It didn't, however, address the competitive shortcomings of the combined company's network of stores that offer optical services and products ranging from eye testing to contact lenses. An acquisition of GrandVision, a big optical retailer, is meant to help fill that gap.

EssilorLuxottica operates more than 9,000 stores, with a large presence in North America through brands like LenCrafters and Pearle Vision, as well as in parts of Asia and Latin America. However, with the exception of Italy, the company's retail network in Europe is relatively small.

The acquisition of Grandvision would give EssilorLuxottica access to about 5,300 stores across Europe that the Dutch company operates as part of a global network of more than 7,200 outlets. GrandVision oversees 30 retail banners including Vision Express in the U.K. and Apollo in Germany.

GrandVision, meanwhile, could benefit from accessing EssilorLuxottica's bigger retail network in the U.S. to reach a broader customer base. The greater scale would also allow the companies to pool their e-commerce offerings as they seek to address growing consumer demand to shop online.

In European trading, GrandVision's stock was up 5.2% at EUR26.68 following news of the deal.

The acquisition is dependent on meeting various conditions including antitrust clearance. EssilorLuxottica agreed to increase its per-share offering by 1.5% to EUR28.42 from the current offer of EUR28 if the deal with HAL doesn't close within 12 months. That increase is recognition of the strong retail presence EssilorLuxottica and GrandVision have in different countries and the greater time regulators are taking to review transactions.

The deal comes at a tricky time for EssilorLuxottica, which could raise questions among investors. The company is searching for a new chief executive and is still integrating operations to wring out the promised cost savings from the merger of Essilor and Luxottica. In addition, analysts have questioned the fit between GrandVision and EssilorLuxottica, as the latter has had a greater focus on offering premium products.

Write to Ben Dummett at ben.dummett@wsj.com

(END) Dow Jones Newswires

July 31, 2019 10:58 ET (14:58 GMT)

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