The Rising Influence of Rising Affluence

[DewDiligence]

Essilor, Luxottica to merge—forming world’s largest eyewear company:

http://www.wsj.com/articles/essilor-luxottica-to-merge-creating-49-billion-company-1484547562

The merger joins two companies that previously risked stepping on each other’s toes as Luxottica expanded into lens manufacturing and Essilor moved into frames. Last year, Exane BNP Paribas warned the profit pool for both companies could shrink because of a harsher price competition for frames and lenses.

Instead the combined companies will have about 27% of the eyewear market, putting them far ahead of other competitors, such as Johnson & Johnson Inc. and Safilo Group SpA, both with market shares below 4%, according to Euromonitor. The merged companies will have a combined annual revenue of €15 billion and earnings before interest, taxes, depreciation and amortization of €3.5 billion. Both companies expect annual synergies worth between €400 million and €600 million.

“Never—since lenses were created centuries ago—have the same people made the lenses and the frames,” said Essilor Chairman and Chief Executive Hubert Sagnières.

…The companies’ different business models mean they have little direct overlap in optical-lens and eyeglass-frame manufacturing, increasing the deal’s chances of winning approval from competition authorities…