Fielmann, which remains the largest factor in the German optical retail market, is getting some new competition. HAL Holding has made another acquisition in Fielmann's home market by taking over Krane-Optik & Akustik, while a large French buying group is believed to be looking at entering the country within the next few months.
HAL has signed a deal to acquire all the shares of Krane-Optik, third-largest integrated chain of optical shops in Germany after Fielmann and Apollo-Optik, which is already controlled by HAL through 98 percent owned Pearle Europe. Krane-Optik made a small profit last year on sales of about €46 million. It operates 87 stores and employs some 650 people.
The takeover has yet to be endorsed by the German anti-trust authorities, but this is probably going to be only a formality. Apollo is estimated to have now an annual turnover of between €250 and €300 million through 488 stores, including 153 franchises. They include optical retail counters at several Karstadt department stores and about 50 stores in Northern Germany; previously bought by Pearle Europe, that were formerly trading as Synoptik.
Some of Apollo's stores compete against those of Krane, which is positioned in the discount segment of the market like Apollo and Fielmann. In fact Fielmann says it declined to make an offer for Krane because it is competing against that chain at about 70 different locations. The leading German optical retailer had also no interest for Starvision, a lens factory owned by Krane.
While it is not yet sure whether Krane will merge with Apollo once the deal is completed, the acquisition will create a marginally larger store network than that of Fielmann, which has 487 stores in Germany. However, the average turnover of a Fielmann store and of Fielmann as a whole is much higher (see next article). The Fielmann brand name is better known in the country, making things difficult for any of its competitors.
Krane is currently owned by Marktkauf, a subsidiary of the large Edeka group in Germany, whose core business is in food retailing. The price of the transaction could not be learnt, but Edeka, which wanted to concentrate more on its core business, is said to be making a capital gain of between €10 million and €50 million.
For HAL, Krane's acquisition expands to around 2,500 the number of controlled optical shops around the world, reinforcing its position as the world's second-largest eyewear retailer after Luxottica. Its latest investments in the sector were the acquisition of a 70 percent stake last March in a Chinese chain, Shanghai RedStar, and the acquisition of Optikk Norge and its Brilleland chain in Norway through Synoptik. HAL has also bought recently large chains in Hungary and Russia.
Separately, Skonenberg, a Dutch specialist in hearing aids owned by HAL, has acquired four small chains and some independent retail outlets specializing in this domain in Germany, building up to a total of about 50 points of sale in the country. The takeover of Krane will put a handful more hearing aid shops into the pot.
For the first six months of 2006, HAL has reported a total turnover of €824 million from its various optical retail companies, up sharply from €720 million in the same period of 2005, thanks in part to the opening of new wholly-owned and franchised stores and to acquisitions in Hungary and China. On a same-store basis, their sales grew by 3.2 percent. Before amortization of intangible assets, their operating profit increased to €104 million from €83 million, with a contribution of €3 million from the most recent acquisitions.
Including its numerous other investments, HAL Holding's net profit after minority interests for the period reached €300.7 million, up sharply from €105.4 million. The increase partly stemmed from a capital gain on the sale of its 20 percent stake in Univar, a large Dutch chemical distribution company. The total net asset value rose by €266 million to €2.94 billion, excluding variations in the value of unquoted companies. Bank debt decreased for the optical retail companies and the group as a whole.