Will EssilorLuxottica and Brussels see eye to eye?
Here’s one merger that’s still on the cards despite the coronavirus turmoil: EssilorLuxottica’s €7bn deal to buy Dutch rival GrandVision. Wanting the tie-up to go ahead isn’t enough though.
The two eyewear companies have to make Brussels see things their way to get the deal approved.
First, EssilorLuxottica needs to convince EU regulators that the deal won’t undermine competition by creating a dominant player in both wholesale and retail markets that could crush small players and eventually lead to fewer choices and higher prices for consumers.
This week the EU sent the company a formal “charge sheet” outlining its concerns about the acquisition. It has almost two months to decide on the deal and it could decide to block it, waive it through or ask for concessions.
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Second, the transaction must survive calls from independent opticians in the bloc — including the UK, Austria and France — to block it. Ashley Fox, a former conservative Member of the European Parliament who works for an unnamed rival party to the transaction, has already asked the commission to reject the merger.
“There is much talk in Europe at the moment about creating ‘European champions’ to rival those in the US and China,” he said. “That is all very well, but if the result is an anti-competitive behemoth that gouges profits at the expense of consumers, we will all be worse off.”
Third, EssilorLuxottica might need to reconsider its offer. When it agreed to buy a 76.72 per cent stake in GrandVision at €28 per share, things were looking rosier for the eyewear company. Now, its stock price is trading at about €24 which could prompt EssilorLuxottica to seek a better deal. It wouldn’t be the first (ahem LVMH).
Brussels insiders tell DD the deal could still happen but warn that it may come at a price in the form of concessions. That is to say, EssilorLuxottica may be forced to sell some juicy assets to get it done. Here’s the full story from DD’s Javier Espinoza and the FT’s David Keohane.