5 Key Things to Know About the Luxottica-Essilor Merger

The combined firm will be ‘a clear leader’ in the industry.

Luxottica and Essilor confirmed Monday morning what news outlets had already suggested was happening: The two companies are planning a merger.

The transaction will be worth $49 billion, the New York Times reports.

In a research note, UBS analyst Fred Speirs wrote: “The new group would be a clear leader in the optical industry, with a strong brand portfolio, global distribution capabilities and complementary expertise in ophthalmic lenses, prescription frames and sunglasses.”

Luxottica (NYSE: LUX), based in Milan, Italy, is the largest eyewear firm in the world, with a brand portfolio that includes names such as Ray-Ban and Oakley. Its retail division includes many well-known names, including LensCrafters, Sunglasses Hut and Pearle Vision.

Essilor, which makes lenses as well as instruments and equipment, is based in France. Its brand portfolio includes names such as Varilux, Crizal, Transitions and Foster Grant.

Here are five important things to know about the merger:

1. The combined group will be called EssilorLuxottica. The specifics were described in the release: “Essilor would become a holding company with the new name ‘EssilorLuxottica’ via a hive-down of all of its operating activities into a wholly-owned Company, to be called Essilor International, and the contribution by Delfin of its Luxottica shares.” Delfin is the Luxembourg-based holding company of the Del Vecchio family.
2. The organization will have combined revenue of more than 15 billion euros (US $15.9 billion) and a workforce of more than 140,000 people, and it will have sales in over 150 countries.
3. The top leadership for the new organization has already been decided. Luxottica’s executive chairman, Leonardo Del Vecchio, will serve as executive chairman and CEO of EssilorLuxottica. Essilor Chairman and CEO Hubert Sagnières will serve as executive vice chairman and deputy CEO of EssilorLuxottica with equal powers as the chairman and CEO. Del Vecchio and Sagnières will also keep their positions of executive chairman of Luxottica and chairman and CEO of Essilor International, respectively.
4. Following the transaction, Delfin would own between 31 percent and 38 percent of the shares of EssilorLuxottica and would be its largest shareholder.
5. Before any of this can happen, the deal will need approvals from shareholders and antitrust regulators. Assuming all goes as planned, the transaction is expected to close in the second half of 2017.

Read more at The New York Times.