(Bloomberg) – The eyewear giant EssilorLuxottica SA is already planning the next step after making an $ 8 billion deal for Dutch retailer GrandVision NV and defusing an internal power struggle.
“GrandVision is just the first step,” Deputy Chairman Hubert Sagnieres said in a telephone interview. “We will not stop here and we have the means for further acquisitions.”
Investors can expect EssilorLuxottica to improve retail and online operations as well as lens and sunglass manufacturing operations, according to Sagnieres. The company seeks expansion into Asia, Africa, and Latin America.
Shares rose as much as 1.6% at the start of Wednesday in Paris.
GrandVision’s purchase came just weeks after EssilorLuxottica tidied the leadership dispute that left analysts worried about cultural clashes with owners of sunglasses Ray-Ban and Oakley.
Simmering competition from a combination of French Essilor and Luxottica Italia spilled over to the public after the company closed their merger last year, with Chairman Leonardo Del Vecchio saying he wanted to appoint his deputy chief executive officer and Sagnieres retaliated that Italy made false statements in an attempt to take control.
The fight ended
The company said in April that it had begun looking for a new CEO in an effort to find a compromise between Del Vecchio and Sagnieres. Not in a hurry to appoint a new head because current CEO Laurent Vacherot and Francesco Milleri work well together, the deputy chairman said.
“There are many emotions, many difficult moments due to various misunderstandings,” Sagnieres said. “Everything is behind us now.”
Luca Solca, an analyst at Sanford C. Bernstein, dared to move quickly after the fight was a good sign.
“We take the fact that it came sooner than expected as a vote of confidence in the evolution of senior management organizations, which should eliminate market concerns about governance,” Solca wrote in a July 31 note.
EssilorLuxottica, which has a market value of around 53 billion euros ($ 59 billion) and net debt of 4.7 billion, has the financial strength to further acquisitions, Sagnieres said. Moody’s Investor Service confirmed the A2’s long-term issuer rating on the company after the GrandVision deal, said the EssilorLuxottica financing plan which includes equity would reduce the negative impact on the balance sheet.
The company is moving to break down barriers between the Italian and French strongholds formed after the agreement, according to Sagnieres. It arranges visits to sites around the world for managers and top councilors, including the Luxottica based in Agordo, Italy, and the Essilor research and development center in Creteil, near Paris.
“This trip is eye-opening,” Sagnieres said. “There are no more E and L on each side. Only one company. “
Unifying Essilor and Luxottica are very important as the first step to prepare for the integration of GrandVision, said the 64-year-old executive. The company will provide further details about the goal of cost savings on the capital market day in London on 25 September