Third Point Urges EssilorLuxottica to Improve Governance
October 24 2019 - 11:45AM
Dow Jones News
By Cristina Roca
Third Point LLC confirmed Thursday in a letter to investors that
it holds a stake of about $700 million in French optical giant
EssilorLuxottica SA (EL.FR), and said it has called on the
company's management to solve a governance deadlock in order to
deliver more value.
The investment firm said EssilorLuxottica, which owns brands
including Ray-Ban and Oakley, is "challenged by a poor
corporate-governance framework," and that it has met with company
executives and shared its view that governance should be improved
with the company's board.
EssilorLuxottica's current arrangement allows its two businesses
to keep running as independent companies, slowing their integration
as well as strategic decision-making, Third Point said.
The investment firm said shareholders are frustrated by
EssilorLuxottica's failure to deliver synergies from the merger of
Essilor and Luxottica, which fused into one last year.
Third Point's analysis of potential synergies forecasts more
than 1 billion euros ($1.11 billion) in additional profit, which is
almost double the company's current target, the investment firm
said.
Third Point sees EssilorLuxottica growing earnings and free cash
flow at a compound annual growth rate of mid-teen digits for the
next few years, and expects earnings per share at the company to
more than double from 2019 to 2023, surpassing EUR8 in 2023.
The investment firm said it built its stake in EssilorLuxottica
early in 2019, confirming media reports from the summer.
EssilorLuxottica has a market capitalization of about 57.65 billion
euros ($64.12 billion) and is, according to Third Point, the
largest eyecare company in the world.
Write to Cristina Roca at cristina.roca@dowjones.com;
@_cristinaroca
(END) Dow Jones Newswires
October 24, 2019 11:30 ET (15:30 GMT)
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