Traditionally, eyewear manufacturers have either been focused on creating the newest fashionable frames or the next cutting-edge lenses, but recent investments by both Luxottica and Essilor International have created two companies that do a little bit of both.
Instead of facing that sort of competition, Luxottica has agreed to merge with Essilor International in order to create an eyeglass empire valued around $49 billion.
Synergetic Merger has Historic Potential
Under the merger of the two companies, brands like Ray-Ban, Lenscrafters and Oakley will be under the same roof, and two companies who long relied on each other for individual success will be working together to remain viable in a market where internet-based eyeglass retailers are beating them out on pricing. Together, Luxottica and Essilor International should hold about 27 percent of the eyeglass market share, far ahead of direct competitors like Johnson & Johnson and Safilo Group SpA that have each captured under four percent.
Investors worry about this deal, though, due to Luxottica’s founder Leonardo Del Vecchio’s purported inability to delegate authority or even successfully name a successor. To reassure both investors and regulators alike, both companies have reiterated that Del Vecchio and Essilor CEO Hubert Sagnieres will share “equal powers” during the integration of the two eyewear empires. After that, Del Vecchio is to have more voting power than any investor in the boardroom.
An Impressive Track Record
Although Del Vecchio is the most controversial part of this merger in the eyes of many, he’s a man with a series of wins under his belt, as well as a passion for making successes out of near-failures. For example, his 1999 purchase of Ray-Ban was the salvation of the brand. His efforts put Ray-Ban back on track as a high-quality name in sunglasses. More recently, his company was involved in the Google Glass project.
Usually, glasses manufacturers don’t do much to raise eyebrows, but this merger will likely persist in the news for a while, both because of the sheer size of the merger and the notoriety of Del Vecchio in the niche. He has such a history of success, though, that it’s likely this deal will turn to gold much like many of his other investments.Google+