Luxotica and Essilor announce merger of 46 billion euros in glasses

MILAN/PARIS-the Italian Luxottica and Essilor hit French merger agreement of 46 billion euros that would create a giant with annual revenue of more than 15 billion euros.
The whole deal in stocks marks one of the biggest alliances of companies in two different countries of Europe and unites the Luxottica, the world''s largest manufacturer of sunglasses with brands such as Ray-Ban and Oakley with the world''s biggest producer of lenses, Essilor.
"Finally ... two products that are naturally complementary-frames and lenses-are designed, produced and distributed under the same roof," said the founder of Luxottica, Leonardo Del Vecchio, 81 years, in a statement.
Luxottica''s shares soared more than 8% at 14:33 (GMT). Already the papers of Essilor climbed almost 12%.
The merger between the two largest companies of a market of 95 billion dollars should create a company able to take advantage of the strong demand for glasses under medical prescription and sunglasses because of an ageing global population and increased interest in careful with your eyes.
Jefferies analysts estimate that the market is growing between 2 and 4% per year, while Luxottica and Essilor claim that at least 2.5 billion people in the world still suffer from vision problems without treatment.
The agreement also eliminates, at least for now, uncertainty about the succession in Luxottica, which lost three Presidents-executives from 2014 because of disagreements with Del Vecchio.
"The strategic rationale is strong," said analysts at JPMorgan Cazenove, adding that the agreement removes the risk of growing competition between the two groups, which in recent years have begun to join each other''s areas. Essilor purchased online retailers and the Luxottica was investing in the production of lenses.
The companies stated that the Asia and Latin America are considered as regions with potential growth markets. E-commerce will also be a priority.
The EssilorLuxotica will have 140,000 employees and have headquarters and will be listed in Paris. The company will still have a complex governance structure, with Del Vecchio and the Chairman and Chief Executive of Essilor, Hubert Sagnieres, effectively sharing the command of the combined company.