Grandvision acquisition hanging by a thread after ruling in favour of EssilorLuxottica

A new episode in the saga of eyewear chain Grandvision and EssilorLuxottica: a Swiss arbitration court has ruled in favour of the latter. As a result, the Italians can call off the takeover without paying substantial damages. However, it seems more likely that they will renegotiate the deal.

Fee of 400 million

The takeover of GrandVision has already been a long process: EssilorLuxottica initially offered 7.3 billion euros for the owner of chains like Pearle, but the coronavirus crisis quickly strained the relationship between hunter and prey. EssilorLuxottica claimed that Grandvision had not given sufficient insight into the business operations during the first months of the pandemic. Hence, EssilorLuxottica believed it was entitled to abandon the deal altogether. 

Grandvision, on its part, did not agree with this interpretation – and had so far been vindicated in this discussion – and wanted to force EssilorLuxottica to go ahead with the deal. If not, the owner of Ray-Ban and Oakley had to pay a fee of 400 million euros. The matter ended up before a Swiss arbitration judge, who has now ruled in favour of EssilorLuxottica.

Leverage for lower takeover price?

This means that the eyewear company can decide to cancel the acquisition of Grandvision altogether, without additional costs. However, the chance seems small it will come to that: EssilorLuxottica has already put a lot of work into the deal and has addressed Europe’s competition concerns by selling numerous stores. Now that the worst of the Covid pandemic is behind us, EssilorLuxottica can use this ruling primarily as leverage to obtain better acquisition conditions, for example, a lower price.

For now, the French-Italian group has only let it be known that it is exploring its options. Grandvision and its owner HAL have only expressed their disappointment for the time being but are awaiting further developments before they are willing to communicate.