Essilor sees US$54 billion merger with Ray-ban maker Luxottica sealed in the first quarter
CEO says ‘missing’ information requested by EU antitrust investigators has been provided, enabling review to restart
Essilor International SA, the world’s largest maker of optical lenses, sees the completion of its US$54 billion merger deal with Italian peer Luxottica in the first quarter of next year as European Union antitrust investigators restart their review, according to the CEO of Essilor, Hubert Sagnières.
The French company agreed in January to join forces with Luxottica, the world’s largest eyewear company and the maker of Ray-ban sunglasses, to create a global eyewear giant with annual revenue of more than 15 billion euros (US$17.4 billion).
But last week EU antitrust regulators said they had suspended their review as the two firms failed to provide requested data.
“We plan to get approval between year end and the first quarter, between December, January or February, around those dates,” Sagnières said on Monday during a visit to Hong Kong.
“Last week, the European antitrust commission suspended the investigation for a few days because of some ‘missing’ documents,” he said. “They got the documents last Friday so we hope today (Monday) they would reopen the case.”
The proposed merger has sparked concerns over a possible monopoly in the optical sector in Europe, as the two companies each have a dominant market position in the segments in which they operate: for Essilor in optical lens manufacturing and for Luxottica in the sale of sunglasses and frames, including other big brands such as Oakley and Persol.
The legislative arm of the EU, the European Commission, said it had “stopped the clock” on the review on October 25 because it was missing some information, but would reopen it once it had the documentation and would adjust the deadline for its ruling accordingly. Previously, the deadline for a ruling was set at by the end of February.
The deal has so far been approved in 11 of the 21 countries where Essilor had sought approval, he said.
Essilor posted a 6.6 per cent rise in revenue for the nine months ended in September, thanks to strong growth in Latin America, Europe and the Asia-Pacific region.
Apart from Europe, Essilor also has its eyes firmly on the vast mainland market.
Poor vision is the world’s largest handicap, China now has around 500 million people who suffer from uncorrected poor vision, according to the company. And as now the ratio of eye glass stores to patients stands at one to 30,000 in general in the country, there is a market for at least another 50,000 optical stores, which offers huge opportunity for companies like Esslior, said Sagnières.
Accounting for around 15 to 20 per cent of China’s whole optical lens sales, Essilor has partnered with thousands of China’s local players, including eye hospitals and stores.
The company has a major production plant in Shanghai, and has recently signed a partnership for one in Danyang, a county-level city under the administration of Zhenjiang, Jiangsu province.
The company is tapping into China’s lower tier cities and villages with the help of a large number of so called “barefoot” doctors – physicians who go villagers’ homes to distribute medicine.
“We associate with village doctors in China, or ‘bare foot doctors’ as they used to be called in the Mao Zedong era. There are around a million now and they are attached to local hospitals.” he said. “We train these doctors to give faster and more accurate eye examinations to older people.”
The company also distributes lenses at numerous China Mobile stores in villages, normally used only to selling sim cards and top up phones. The company trains the staff there to sell its lenses.
Sagnières said the company is using the help of the superb networks those doctors and booths have to cultivate long term growth.