HAL Hal Trust

   By Cristina Roca 
 

Shares in EssilorLuxottica SA (EL.FR) and Grandvision N.V. (GVNV.AE) traded higher Wednesday after the Franco-Italian optical giant said it will buy a 76.72% stake in the Dutch company, valuing it at 7.12 billion euros ($7.92 billion).

At 1016 GMT, shares in EssilorLuxottica were up 3.6% at EUR122.80, and shares in Grandvision traded 5.4% higher at EUR26.72.

The two companies on Wednesday also reported first-half results, but the big news was EssilorLuxottica's finalized commitment to take over Grandvision, Bernstein analyst Luca Solca said.

"We take the fact that it comes sooner than expected as a vote of confidence on [EssilorLuxottica's] senior management organization evolution, which should allay market concerns on governance," Mr. Solca said, making reference to a governance dispute that emerged between the heads of Essilor and Luxottica after the two companies' EUR46.3 billion merger last year.

EssilorLuxottica said Wednesday that it will acquire the majority interest in Grandvision for EUR28 a share, or EUR5.46 billion in total. It will launch a mandatory public offer for the all outstanding shares in the optical retailer after the transaction is completed, it said.

If the deal doesn't close within 12 months, the purchase price will increase to EUR28.42 a share, the companies said.

The acquisition of Grandvision will allow EssilorLuxottica to expand its optical retail network, especially in Europe, the Franco-Italian company said.

Grandvision has over 7,200 stores globally and EUR3.7 billion in annual revenue, EssilorLuxottica said. The deal should be EPS-accretive at about 5% for the owner of Ray-Ban, RBC analysts estimated.

Citigroup acted as EssilorLuxottica's advisors on the deal, while Grandvision was advised by ING.

Write to Cristina Roca at cristina.roca@dowjones.com; @_cristinaroca

(END) Dow Jones Newswires

July 31, 2019 06:32 ET (10:32 GMT)

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