Essilor acquiring Ray-Ban producer

Ophthalmic lenses on display in the laboratory of an Essilor factory

Two of the world's biggest eyewear firms set their sights on a €50 billion (£44 billion) merger today when Ray-Ban owner Luxottica joined French lens-making giant Essilor in one of the largest cross-European deals.

Combined, the two companies have an annual 15 billion euro turnover and employ almost 140,000 people.

Mr Del Vecchio will also take up the role of chief executive and executive chairman of the merged company, which will be listed in Paris. Since taking the lead, Del Vecchio has stepped up investments to boost Luxottica's retail network and increased its lens manufacturing business.

After staying out of business operations for almost a decade, Del Vecchio recently returned as CEO of the company.

"Finally. two products which are naturally complementary - namely frames and lenses - will be designed, manufactured and distributed under the same roof", Luxottica's 81-year-old founder Leonardo Del Vecchio said in a statement on Monday.

The management upheaval and uncertainty over who could take over at Luxottica, together with a slowing US market, have weighed on its shares, which before the merger was announced on Monday were trading 27 percent off their 2015 peak.

Oakley Inc.'s Italy-based parent, Luxottica Group SPA, plans to combine operations with Essilor International S.A.in France, pending regulatory and shareholder approval.

Essilor would then make a mandatory public exchange offer, in compliance with Italian law, to acquire all of the remaining and outstanding shares of Luxottica at the same exchange ratio.

The companies described the transaction as a combination rather than an acquisition of Luxottica by Essilor.

However, the new company will have more than 50 per cent of the sunglasses market and be the largest maker of spectacle frames, lenses and ready-made reading glasses, according to Jasmine Seng, an analyst at Euromonitor.

Del Vecchio would serve as executive chairman and CEO of EssilorLuxottica.

The merger is expected to boost operating profit by up to 600 million euros in the medium term, the companies said.

Del Vecchio returned to the helm of the group in 2014 after previous boss Enrico Cavatorta quit.

Luxottica and Essilor, which have a market value of about 24 billion euros and 22 billion euros respectively, had explored a possible tie-up a few years ago.

Mediobanca advised Delfin on the merger, with Essilor advised by Rothschild and Citi.

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