U.S. Markets closed

EssilorLuxottica's latest bid may raise antitrust questions

Leah Hodgson

Eyewear giant

EssilorLuxottica is in talks to acquire a nearly 77% stake in optical retailer

GrandVision, in a deal that could reportedly value the business at some €7.1 billion (around $8 billion). The Franco-Italian business is discussing an offer of approximately €28 per share for the stake, which is currently held by

HAL, an investment company backed by the Dutch billionaire Van der Vorm family.  



GrandVision's shares shot up as much as 10% following the bid, hitting €25.30 per share, the highest point since September 2016, per Bloomberg. According to the company's recent financial reports, 2018 revenue was up 10.3% from 2017 to stand at more than €3.7 billion and EBITDA was at €576 million, 6.2% higher than the previous period. GrandVision operates under retail brands including Brilleland and For Eyes and has more than 7,000 stores across 40 countries. 



If successful, the deal would further cement EssilorLuxottica's dominant position in the global eyewear sphere. While Oakley and Ray-Ban are arguably the most popular brands in its portfolio, EssilorLuxottica has taken on the challenge of covering the entire value chain by combining high-end brands and retail heavyweights. This has seen it acquire companies such as

Sunglass Hut and Pearle Vision, while it also owns the licenses of designer eyewear brands Bulgari, Chanel, Armani, Prada, Versace and more. If you wear glasses, chances are they’re from EssilorLuxottica. 



Formed from a €48 billion merger last year, the optical behemoth has been operating under a cloud in recent times as a management feud broke out over control of the business. Luxottica founder and chairman Leonardo Del Vecchio filed an arbitration request in March after claiming that former Essilor head Hubert Sagnieres—who is the executive vice-chairman of the combined company—violated the merger contract. In May, they settled the dispute on the condition that a new CEO would be found. The business has also seen a decrease in revenue this year, reporting €16.2 billion compared to €16.3 billion in 2017. Operating profit fell nearly 5% from €2.7 billion to less than €2.6 billion. 



The big known-unknown is the response of the European Commission and, in particular, antitrust commissioner Margrethe Vestager. The outspoken official has had no qualms in blocking transactions such as

Siemens' takeover of

Alstom's rail transport business and slapping fines on industry heavyweights if consumers are believed to be left worse off or simply with less competition following an acquisition. EssilorLuxottica has already been criticized for its prohibitive prices and bullying tactics which has led some to claim that it has a near monopoly of the market. Handing even more customers over to the giant may spark fears that consumers and independent businesses will suffer—a situation not welcomed by regulators. 



Featured image via GoodLifeStudio/iStock/Getty Images Plus