Essilor has agreed to acquire Transitions Optical by purchasing the remaining 51 per cent stake owned by US partner firm PPG Industries in a deal worth $1.73bn (£1.12bn).
The deal, which is expected to be finalised in early 2014, will also see Essilor acquire a 100 per cent stake in Italian sun lens manufacturer and PPG subsidiary Intercast, which makes plano sun lenses and shields for visors and goggles.
Essilor, which already owned 49 per cent of Transitions, said the acquisition would allow it to drive faster growth in the expanding photochromic category, which it said was growing at twice the rate of the regular optical goods market.
‘The acquisition of Transitions Optical is fully aligned with Essilor’s strategy. It’s a company we know well, so the integration process should be smooth,’ said Hubert Sagnières, Essilor chairman and CEO.
As part of the acquisition, PPG also entered into a multi-year agreement with Essilor for the continued supply of optical dyes and sun lens research and development.
PPG said it had suspended a programme of share buy-backs pending completion of the sale and added that it was looking for new opportunities to re-invest proceeds of the deal, but would also now aim to repurchase another $500m to $750m of its own shares. It also expected earnings benefits from the sale to offset the reduced revenue from the Transitions divestment.
‘Transitions has been an excellent growth catalyst for PPG for more than 20 years,’ said Charles E Bunch, PPG chairman and CEO. ‘We are pleased with the enterprise value of the transaction, which reflects a valuation multiple midway between PPG’s and Essilor’s multiples, benefiting both parties.’
Essilor said Intercast complemented the acquisitions of BNL, Gentex and Polycore (News 12.07.13) and strengthened its position in the mid-to-premium offerings in the plano sun lens sector.