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Toh Han Shih

Eyewear company Moulin International Holdings has signed an agreement to acquire a controlling 56 per cent stake in United States optical retail chain Eye Care Centres of America (ECCA), after a failed attempt to acquire another leading eyewear chain earlier in the year.

Moulin and US private equity firm Golden Gate Capital would pay a combined US$450 million to buy 99 per cent of ECCA from Thomas H. Lee Partners, another US private equity firm, Moulin said yesterday.

This means Moulin, the world's third-largest eyewear firm, will  pay about US$255 million for the stake. 'Moulin has become the first Chinese manufacturer-distributor to acquire a controlling interest in a major US retail chain,' Moulin chairman Ma Bo-kee said.

Analysts applauded the move, calling the price reasonable and saying it would boost earnings for the Hong Kong company.

Moulin's share price has fallen nearly 50 per cent since February this year.

'This is Moulin's first retail footprint in the US. The acquisition should be positive  and earnings enhancing,' GK Goh analyst Renee Tai said.

The price Moulin was paying for its  ECCA stake was  similar to other recent acquisitions in the eyewear industry, as measured by price-sales ratio, Ms Tai said.

With ECCA's annual sales at about US$370 million and the acquisition price US$450 million,  the price-sales ratio was about 1.2, which was fair, she said.

In July,  Moulin's US$451 million bid for Cole National Corp, the second-largest US eyewear retailer, was  trumped by a US$495 million  bid by Italian rival Luxottica Group, the world's biggest eyewear firm.

ECCA, with 378 stores in the US, was much smaller than Cole, which had more than 2,100 retail locations in North America and Europe, Ms Tai noted.

'ECCA is the last piece to Moulin's business model to be a fully integrated eyewear company,' she said.

'The acquisition brings Moulin closer to the US market, allowing Moulin to know what end-customers want.'

Moulin chief executive Cary Ma Lit-kin said: 'The rapid consolidation of the US eyewear retail market will have a substantial impact on manufacturing and distribution throughout the optical industry. Moulin's expertise in China manufacturing and global distribution is well-suited to support ECCA's aggressive growth strategy in the consolidating US retail market.'

Moulin's partner in the acquisition, Golden Gate Capital, manages  more than US$2.5 billion.  The private equity firm has invested in a diverse range of companies, ranging from apparel to information technology to broadcasting.

The acquisition of ECCA, which is subject to approval from US regulators and Moulin shareholders, is expected to close in the first quarter of next year. JP Morgan Chase has committed up to US$340 million to finance the acquisition and provide for Moulin's working capital needs.



Moulin acquires majority stake in US chain