EL Essilorluxottica

   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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