EssilorLuxottica announced yesterday that its board of directors has approved the completion of the acquisition of HAL’s 76.72 percent stake in GrandVision at the price of €28.42 per share that was initially agreed on July 2019.
The announcement was followed by a very short statement by GrandVision, in which the Dutch-based retail group only said that it took note of EssilorLuxottica’s press release. HAL has not made any official comment at the time of publication.
The decision by EssilorLuxottica comes only a few days after a favorable outcome in the arbitration proceedings against both HAL and GrandVision which allowed the Italo-French group to terminate the takeover process. It puts a quick end to industry observers’ speculations that the arbitral decision would lead to a renegotiation of the transaction agreement, and in particular the negotiated price of €7.2 billion.
In a joint statement, Francisco Milleri and Paul du Saillant, respectively CEO and deputy CEO of EssilorLuxottica, stressed that the strategic rationale behind the transaction remained unchanged and that the group was ready to turn a page and close the transaction without further delay, at a time when the optical market is returning to growth.
The group’s decision comes almost two years after the initial agreement and after several months of legal dispute with both GrandVision and HAL. Although EssilorLuxottica had the option to rediscuss the initial deal, it is possible that the group decided not to enter another round of potentially long negotiations at a time when the European optical retail market is rapidly changing. The Covid-19 pandemic has accelerated the shift towards an omnichannel business model on which some of GrandVision’s competitors, like Fielmann for example, are investing heavily.
Except for a highly improbable last-minute twist, EssilorLuxottica will then take control of a group with a network of roughly 7,200 optical shops in 40 countries, spread over 40 banners addressing different segments of the market. Added to the 11,000 shops it already operates, in the U.S. mostly, and to its e-commerce operations, the move is expected to boost the direct-to-consumer business of the company. After the integration of GrandVision, the group will achieve total annual revenues of more than €20 billion.
However, the integration of such a large and diversified structure as GrandVision into a group that is just emerging from a long period of governance issues, following the merger of Essilor and Luxottica in 2018, might be challenging in several ways. It will be interesting to follow how EssilorLuxottica will reorganize GrandVision’s management structure and also how it will accelerate the digital transformation of the numerous retail banners. Another question mark is the current state of relations between EssilorLuxottica and GrandVision teams after several months spent in legal proceedings.
The closing of the transaction will trigger the divestment of about 350 stores in Europe and 90 in Chile, following the conditional approval of the transaction by the European and Chilean market regulators.