(Bloomberg)—After more than a year of animosities that landed the two eyewear specialists in court, EssilorLuxottica SA (No. 45 in the Digital Commerce 360 Europe 500) and GrandVision NV have decided to make up and proceed with the 7.3 billion-euro ($8.7 billion) combination that gives the manufacturer or Ray-Ban sunglasses a vast network of more than 7,000 retail outlets.
A week after EssilorLuxottica looked poised to renegotiate the deal or even walk away, the company said late yesterday that it will stick to the original accord from mid-2019 and honor the purchase price of 28.42 euros for each GrandVision share.
The move surprised investors who had bet on EssilorLuxottica Chairman Leonardo Del Vecchio to use his favorable position to squeeze out a discount. After all, an arbitration court had sided with his company this month, a legal victory that would have allowed the buyer to change the terms or even walk away at no cost.
In the end, though, EssilorLuxottica decided that “the strategic rationale of the transaction remains strong and unchanged,” CEO Francesco Milleri said in the release last night.
“Whilst we had little doubt that EssilorLuxottica’s management would finalize the deal, we were surprised by the absence of a price discount,” analysts at Morgan Stanley wrote in a note after the announcement. “The market was indeed assuming a deal renegotiation. As a result, we believe that investors might see this outcome as disappointing.”
Relations between the two companies had soured after the COVID-19 health crisis forced store closures, prompting EssilorLuxottica to sue GrandVision for information over business performance. Sales in physical outlets have rebounded swiftly, renewing the original attraction of buying GrandVision, which promises to be another transformational act for Del Vecchio.
Del Vecchio, 86, may have had little appetite for another messy and legally fraught integration following the antagonistic combination of Italy’s Luxottica, which he founded, with the French lens maker Essilor. Originally conceived as a merger of equals, the deal resulted in Del Vecchio retaining control, causing friction with the French side.
GrandVision said in a separate release that it “takes note” of EssilorLuxottica’s decision to complete the purchase of the 76.7% owned by HAL Investments, a holding controlled by the billionaire Van der Vorm family.
“It was high time,” Luca Solca, an analyst at Sanford C Bernstein & Co., wrote by email. “We salute the decision to go ahead with the merger at no discount, as cool-headed assessment of business rationale and strategic perspective prevail over negotiation brinkmanship.”Favorite