Moulin International, which lost a joint bid with HAL for Cole National out to Luxottica earlier this year, has announced a definitive agreement to acquire a controlling interest of about 56 percent in Eye Care Centers of America (ECCA), the second or third-largest optical retail chain in the USA depending on the definitions. An additional stake of about 43 percent will be bought by Golden Gate Capital, a private equity firm based in San Francisco. The balance of the shares will be held by ECCA's management.

Under the deal, which is subject to regulatory approval, the new owners will pay a total of $450 million, including assumption of debt of about $220 million, to buy 100 percent of the American chain from the former owner, Thomas H. Lee Partners. The amount is not very different from what Luxottica has paid for Cole National in terms of the multiples. Based in San Antonio, Texas, ECCA had sought a stock market offering last spring, but it could not generate enough interest on the part of non-strategic investors, partly because of its relatively high debt levels.

In the 39 weeks ended Sept. 25, ECCA achieved net income of $14,151,000, up from $12,454,000 in the same period a year ago. Income from operations (Ebit) grew to $35.25 million from $33.23 million. Sales increased to $304.87 million from $288.30 million, with a 2.1 percent gain on a same-store basis, reduced to 1.1 percent in the 3rd quarter because of the hurricanes in the southeastern part of the USA. The gross margin declined to 68.6 percent from 69.1 percent, partly because of a higher proportion of branded frames and children's frames, and due to higher laboratory costs.

Moulin is not yet a supplier of ECCA, but it is understood that it will become one. The acquisition gives Moulin the large captive market that it was looking for in the USA, where it already has a wholesale subsidiary, with a strong focus on the ?value segment? in which it specializes. A bit like Cole's licensed brands division, which had been Moulin's original target, this is also the focus of ECCA, which sells 11 different private brands in its 378 stores in 33 states. Of those, 313 are company-owned.

ECCA describes itself as the leading ?pure play? optical retailer in the industry, as it is surpassed only by the new Luxottica Retail empire and by Wal-Mart's optical departments in terms of optical sales. A new challenge may come, however, from the recently announced merger of Sears, Roebuck and Kmart to form the third-largest mass merchant in America after Wal-Mart and Target. Sears has been running its own optical retailing business for many years.

In announcing the deal Friday, Moulin pointed out that in the 1990's it was the first Chinese manufacturer that decided to acquire its own international brands with the takeover of Metzler International and United Optical, in response to changes in the OEM and ODM market. It has now become the first Chinese manufacturer and distributor to buy a major US chain. Moulin is the largest eyewear manufacturer in Asia and the third-largest one in the world, with an annual output of more than 15 million frames.