Exclusive: Third Point acquires stake in Ray-Ban EssilorLuxottica – sources

(Reuters) – Third Point LLC, the US hedge fund that drove Nestlé SA companies to make changesNESN.S) to Campbell Soup Co (CPB.N), took a stake in the manufacturer of Ray-Ban EssilorLuxottica SA (ESLX.PA), they learned Sunday.

Third Point, led by billionaire investor Daniel Loeb, targets EssilorLuxottica in the midst of a power struggle within the world's largest manufacturer of glasses and glasses. It was created last year thanks to the 48 million euro merger of French companies Essilor and Italian Luxottica.

Presented as a merger of equals, it degenerated into a battle for control between Luxottica founder Leonardo Del Vecchio and Essilor boss Hubert Sagnieres. The two parties announced a truce in May, but the company is still facing uncertainty as it seeks a CEO able to realize the 600 million euros in annual savings promised by the merger.

Third Point met with Del Vecchio, who is now the executive chairman of EssilorLuxottica and who owns about one-third of the company, according to two sources. The details of the meeting and on the exact issue of Third Point could not be learned.

Third Point has in the past used operational improvements in companies where their stock could be fueled by a different strategy, although the position adopted by the New York-based hedge fund on how EssilorLuxottica is managed is not clear. Third Point is still buying EssilorLuxottica shares, said one of the sources.

The sources requested anonymity because Third Point's investment in EssilorLuxottica is confidential. EssilorLuxottica, with a market capitalization of 57 billion euros, and Third Point declined to comment.

A representative of Delfin, the holding company of Del Vecchio, also declined to comment.

The Essilor and Luxottica camps were supposed to have the same weight in the leadership of the new company under an agreement expiring in 2021.

Tensions surfaced last November, when Del Vecchio appeared to engage his right hand man and Luxottica general manager Francesco Milleri as the next managing director.

The dispute reached a climax in March when Delfin, of Del Vecchio, announced his intention to seek arbitration from the International Chamber of Commerce, prompting Essilor to ask a Paris court to appoint an outside mediator.

Investors, including Baillie Gifford, Comgest, Edmond de Rothschild Asset Management, Fidelity International, Guardcap and Phitrust and Sycomore Asset Management, argued that the company's integration was undermined by a "major governance crisis". EssilorLuxottica's board of directors failed in the shareholder vote.

In May, both parties agreed to end their legal enmity. Del Vecchio and Sagnieres have entrusted Milleri and Laurent Vacherot, current CEO of EssilorLuxottica, with joint responsibility for overseeing the integration process and defining the strategy.

They set a deadline to find a new CEO by the end of 2020. Milleri and Vacherot agreed not to propose themselves for the position.

EssilorLuxottica announced last month the acquisition of Dutch optics group GrandVision NV (stating that both sides had set aside some of their differences.)GVNV.AS) for a maximum amount of EUR 7.2 billion.

GrandVision, whose channels include Vision Express in Great Britain and For Eyes in the United States, would give EssilorLuxottica control over 7,000 points of sale worldwide, where it already sells brands such as Varilux lenses and Ray-Ban sunglasses. Other brands EssilorLuxottica include Oakley, Persol and Oliver Peoples.

The agreement should be the subject of close scrutiny by the competition regulators. The European Union has approved the merger of Essilor and Luxottica only after a long study.

CONGLOMERATE CHALLENGE

Third Point, which manages $ 15 billion worth of assets, has spent this year conquering some of the largest conglomerates in the world and has informed investors of its intention to make more activist investments where it has benefited.

In June, he appealed to Sony Corp.6758.T) to divest its semiconductor business and sell its interests in Sony Financial and other units in order to position itself as a world leader in entertainment.

He also urged United Technologies Corp. (UTX.N) to cancel its aerospace merger with US defense contractor Raytheon Co (RTN.N), describing this operation as "badly conceived". Earlier this month, the fund announced that it had reduced its stake in United Technologies.

In the first half of 2019, Third Point's flagship fund returned 13.1%, fueled by gains from many of its activist positions, from Nestlé to Sony.