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For several days, the dailies speak a lot about the comparison under the leadership of EssilorLuxottica, the company founded in 2018 by the merger of the largest eyewear company, the Italian Luxottica, and the largest French manufacturer Essilor. This merger is one of the largest ever made in Europe and led to the creation of a very large company, with a turnover of 16 billion euros, with 57 billion capital and 150,000 employees , capable of glbades a presence that some even call monopoly.
Luxottica joined the operation through its holding company Delfin, and Leonardo Del Vecchio, president and founder of the company, as well as the richest man in Italy, were entitled to 32.5% of the shares, including 31% of the rights. of vote. The executives and employees of Essilor held 4% of the shares. Del Vecchio is president of the new company, while the president of the French multinational Essilor, Hubert Sagnières, is vice-president. The merger agreement had recognized equal powers of enforcement and equal representation of the respective companies on the board of directors.
The appointment of the new CEO of the company is at the center of the dispute between Luxottica's management and that of Essilor, but many observers interpret it as the most obvious symptom of an approach and dedication. A very different nature of the two companies that joined the group. Over the past few months, Del Vecchio has repeatedly suggested that, as general manager of the new group, he was the managing director of Luxottica, his intimate collaborator, Francesco Milleri, who however was not appreciated by the French from Essilor: they considered him too close to Del Vecchio. , and they would like a more neutral role for this role.
A historic merger
There had been talk of the possible merger of the two companies for several years. Many doubted that such an operation would be possible, which would have led to the creation of a company capable of controlling virtually the entire market and supply chain of eyeglbades. The merger was announced in January 2017 and the antitrust authorities of the European Union and the United States Federal Trade Commission, which approved the project's operation. The journalist Sam Knight commented on the news in a long survey published in the guardian saying that "In seven centuries of eyewear history, there had never been such a thing".
On one side, there is Essilor, founded in 1972 by the merger of two French companies, Essel and Silor, which controls about 45% of the target market and owes its fortune to the invention of the first objective Progressive, marketed under the Varilux brand, which allows a single lens to simultaneously correct presbyopia and other visual defects such as myopia. On the other hand, Luxottica, which controls 25% of the executive market, has a unique history of success and an expansion of its presence in the market.
This last percentage hides the huge number of brands and stores owned by Luxottica: over the years, the company founded in 1961 in Agordo as a small eyeglbad factory has gradually increased by 80%. of the world's leading brands, as well as dozens of eyewear retailers. Ray-Ban, Persol, Oakley, Prada, Armani and Dolce & Gabbana are just a few of the eyewear brands whose frames are produced by Luxottica, or through the ownership of their brand or license.
The sight business
"For 2000 years, people live mainly outside," Sagnières told Sam Knight. "But suddenly, they live inside and we use it in our favor." The words of Sagnières make us understand the huge potential of the merger between Essilor and Luxottica in a society that has evolved rapidly over the last hundred years, "a species that wears glbades".
The average age of the population has gradually increased, as has the number of people who need to correct visual defects due to aging. In addition, society has become increasingly urbanized and has also changed the way we use our eyes, for example by spending many hours of the day in front of a computer screen, smartphone or TV. And literacy of a large part of the world's population has generated reading habits that did not exist before, and with them the need to correct vision defects. All this means that there are more and more people who need glbades and that there will be even more, according to experts.
According to a study published in 2016 in the journal ophthalmologyby 2050, 4.8 billion people, about half of the population, will be myopic and 938 million will have severe forms of myopia with greater health risks. It is also estimated that in 2018, 2.5 billion people worldwide, especially in the poorest regions, would need corrective glbades but would not be able to afford them. The problem concerns in particular Africa, India and China. In the latter country in particular, there would be 720 million people with vision problems and it is expected that over 80% of the Chinese population will become myopic in the next thirty years.
Added to this is fashion, which has made sunglbades a tool not only useful for defending UVA rays, but also an accessory to show: it's the same thing and what happened to the glbades. The challenge of Essilor and Luxottica, as he wrote the Financial Times in 2017, This is not only for eyewear manufacturers, but also for large groups in the fashion and luxury sector, such as LVMH and Kering :. "These are the real rivals for me," said Sagnières. "When a person buys a scarf for $ 300 instead of a new pair of glbades, I'm sad, maybe that person needs a second pair of glbades, so that's one." scarf might not be so useful. "
The comparison with fashion accessories is even more so if we consider the supplements with which the "signed" glbades reach the cost to the consumer. Luxottica achieved this through a very aggressive policy, launched in the 1990s, to acquire the world's leading eyeglbad retailers. Among the many channels owned by Luxottica, one can mention Salmoiraghi and Viganò and Sunglbad Hut, which allowed to impose their products at the desired prices. The almost total control of the respective markets by Luxottica and Essilor allows both companies to manage the prices of their products at will. It turns out that the mounts whose production costs only a few tens of euros are resold with triple or quadruple margins, even reaching the hundreds of the most famous brands.
This is even more obvious in the case of lenses, where profit margins can exceed 700 to 800%. In particular, he spoke to Knight about guardian, the most important benefits are progressive lenses, scratch-resistant coatings and blue light filters, all features that manufacturers only cost a few cents, but that end customers can cost up to 60 euros per lens.
About the prices of glbades, recently the Los Angeles Times interviewed E. Dean Butler, founder of LensCrafters, the largest chain of eyeglbad retailers in the United States, bought by Luxottica in 1995. According to Butler, the prices charged by Luxottica are totally skewed, as far as they are concerned. This is a pair of Prada branded glbades, it can cost the producer 15 dollars (about 13 euros), while a single lens costs about 1.25 dollars (1.10 euros). Paying up to 800 dollars (about 700 euros), as happens with some glbades in the United States, is according to him "a total scam": the "supplement" would also be 1,000%.
the Los Angeles Times he also spoke with Charles Dahan, one of LensCrafters' leading suppliers with his company, Custom Optical. According to Dahan, when Luxottica took over LensCrafters, it reinforced the presence of eyewear brands it owned in the stores, resulting in the collapse of sales of Custom Optical, which had to cease in 2001. Oakley, a brand of eyewear sun much appreciated by fans of skiing and motor sports, also ran the same risk: Sunglbad Hut was the main retailer, bought by Luxottica in 2001. After the acquisition, to avoid the end to Custom Optical, Oakley was obliged to buy at Luxottica. "That's how they managed to take control of so many brands," said Dahan. "If you do not do what they want, they cut you off." It must be said that Luxottica's policies are the ones that have led the company to success and power envied and admired around the world, and to give to its founder, Del Vecchio – with its enterprising and authoritarian character and its tremendous climbing history social – an almost legendary status in world trade.
Because Luxottica and Essilor are fighting now
Following the March 18 Board meeting, which was supposed to begin the selection process for the new CEO, Delfin issued a note in which he said he had underlined "the behavior of some Essilor representatives who deserve immediate action. by the Council, which is contrary to the duty of sincere cooperation and good faith required by the 2017 combination agreement between Essilor and Delfin ".
Subsequently, in an interview with Le FigaroDel Vecchio explained that his irritation was due to the fact that Essilor would hire four directors, all of them in key positions, without him or the board being informed. Del Vecchio notably accused Sagnières of having broken the pact signed in 2017: "Only accept what he proposes." […] Since the first general badembly of the new group, on November 29, it has acted as if Essilor had taken over Luxottica.
The day after the interview with Del Vecchio was Le Figaro, The answer came from Sagnières, who spoke of false accusations of the founder of Luxottica, accusing him in turn of having tried since the first meeting of the new group to impose on Milleri, as new director of the company, to take control of the group. "Despite the denials," said Sagnières about Del Vecchio, "a number of his moves reflect an attempt to take control of the new group, without recognizing any shareholder bonus." The comparison seems to be based on two very different histories of the two societies: the most Italian and the most competitive, the most traditional and the most collective, the French, with many repercussions on the respective cultures.
Mr. Milleri, 57, began his career at Luxottica as a provider of management software and quickly gained the trust of Del Vecchio, becoming one of the leading consultants. Despite not having a managerial role, his figure, he says Il Sole 24 Ore, had begun to dominate in the decisions of Del Vecchio, so much to bring in 2014 to the rapid resignation of the general manager of the time, Enrico Cavatorta, of very little successor to Andrea Guerra, who had been at the head of the company over the past ten years in turn, according to journalistic reports – after Del Vecchio's decision to resume a larger role (Guerra is now the CEO of Eataly).
In March 2016, Milleri joined the board of directors. A month later, he was appointed vice president and in December he became CEO. According to Del Vecchio, it is Milleri who obtained the agreement with Essilor for the merger and, in an interview with Corriere della Sera Last December, he said he had included in the contract signed with the French a clause providing that Milleri takes his place in case of death.
Following the announcement of this clash, the EssilorLuxottica stock, listed on the Paris Stock Exchange, lost more than 6% on March 21, raising fears for the future of the process. 39, integration between the two companies, which should be concluded in May 2020. with the approval of the budget. According to badysts at the Equita investment bank, "from an operational point of view, a stalemate on governance increases the risks badociated with the implementation of the project of integration. […] If the situation does not allow to find a rapprochement, as we hope, the risk is that the agreements are the subject of a new discussion (whose validity ends in April 2021) and at a meeting in badembly ".
Paradoxically, however, a source close to Essilor said La Stampa, on March 21, "the committee for the integration of the two companies met, where synergies were discussed. Sagnières and Asia, as well as Del Vecchio, from Milan, took part. Both intervened in the debate, without any reference to their contrasts. Usually, business, as if nothing had happened.
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