Family-owned eyewear group Luxottica and French rival Essilor have agreed to a €46 billion ($49 billion) merger that will create a leader in the eyewear industry with revenues of more than €15 billion.
The merger, one of the largest tie ups in European history, combines Luxottica, known for brands such as Ray Ban and Persol, and Essilor, a French company leading the charge in ophthalmic lenses.
Luxottica founder Leonardo Del Vecchio, who is the richest man in Italy, is set to become the largest single shareholder in the combined company with a stake of 31% to 38%, and will also take on the roles of chairman and chief executive.
“The marriage between two key companies in their sectors will bring great benefits to the market, for employees and mainly for all our consumers,” Del Vecchio said in a statement.
“Finally, after fifty years, two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof“.
While Luxottica is currently the largest player in the eyewear markets, with €7.7 billion in sales and 78000 employees, the news comes amid a difficult time for the business: over the past two years the firm has gone through three chief executives.
Luxottica is also suffering from increasing competition from large luxury players, such as family-owned Kering, the French conglomerate owned by Francois-Henri Pinault, which recently took their eyewear business in-house thanks to their success.
Through the merger with Essilor, which produces ophthalmic lenses and ophthalmic optical equipment, the combined business hopes to further capitalise on the global eyewear market, which is set to reach $165 billion by 2022, according to market researcher Global Market Insights.
The eyewear market is expanding at a healthy pace thanks to an ageing population as well as increasing awareness surrounding eye care—corrective surgery is expected to impact growth as time goes on.
Essilor and Luxottica projected the newly combined company would progressively generate cost savings ranging from about $424 million to $636 million in the medium term.