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French-Italian eyewear group EssilorLuxottica is pushing ahead with the sale of 350 stores – including all GrandOptical branches in Belgium – to complete its deal with GrandVision. According to Bloomberg, investment banks Lazard and Mediobanca have to get the lot sold before the increasingly tight deadline, the end of July.
True saga
Since EssilorLuxottica’s bid in the summer of 2019, the GrandVision acquisition has already become a true saga, with two main storylines. The first is a discussion between the two parties themselves. This discussion erupted in the middle of last year – during the Covid crisis – following poor results from GrandVision. EssilorLuxottica claimed that GrandVision had not given enough insight into the course of events during the first months of the pandemic. GrandVision argued that EssilorLuxottica was merely trying to get out of the deal – 7.3 billion euros is a lot in economically uncertain times.
That issue is now in arbitration. The stakes of the case: if the takeover is not completed by the end of July this year, EssilorLuxottica’s bid will lapse, but the French-Italian group will have to pay damages of 400 million euros to GrandVision. So the clock is ticking, loud and clear.
Goliath of eyewear
That timing is put under further pressure by the other big storyline: Europe’s concern that a merger between the two companies would lead to an overly dominant player in Europe. European Commissioner Margrethe Vestager is concerned about the vertical integration: the merged group would dominate the chain from frames and glasses to opticians and everything in between, making it difficult for competitors to compete with this Goliath of eyewear.
And so EssilorLuxottica has to divest 350 stores. The European Commission already made it clear which stores the company has to sell:
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GrandOptical’s 35 stores in Belgium, albeit without the brand name.
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174 stores in Italy, including the entire VistaSi chain.
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142 Eyewish stores in the Netherlands, including the brand name. The Eyewish stores that the merger group wants to keep will need to carry on under a different brand name.
That’s a big chunk, which, according to Bloomberg, generated a turnover of 160 million euros in pre-Covid times. And that chunk has to go within the next two months. Therefore, according to Bloomberg’s information, Lazard and Mediobanca are holding talks with potential buyers. However, this hasn’t been confirmed by any of the parties. Those talks must quickly become concrete, especially with the summer approaching. Otherwise, EssilorLuxottica will have to pay 400 million euros to a competitor, without anything in return.
