Will this affect your business strategies?

[Judy Canty]

Essilor to Acquire 50 Percent of Shamir Optical
KIBBUTZ SHAMIR, Israel and CHARENTON-LE-PONT, France—Shamir Optical Industry Ltd. (Nasdaq: SHMR), Kibbutz Shamir and Essilor International (NYSE Euronext: EI) today announced that they have signed an agreement whereby Essilor will, through a series of transactions, acquire 50 percent of Shamir Optical. As a result of these transactions, Kibbutz Shamir and Essilor will each own 50 percent of Shamir Optical. The agreement comes after months of rumors of a pending deal between the two lens makers.
Headquartered in Kibbutz Shamir, Israel, Shamir Optical is a leader in the fast growing freeform lens technology sector. The company reported 2009 revenues of $142 million, generated mainly in Europe and the U.S., and has approximately 1,400 full-time employees. Essilor, based in Charenton-le-Pont, is the leading ophthalmic lens manufacturer worldwide.
Under the terms of the agreements between Essilor and Kibbutz Shamir, the existing management team of Shamir Optical will remain in place.
The transaction, which is subject to regulatory approvals, rulings, the approval of Shamir Optical’s shareholders in accordance with Israeli law and the approval of the district court of Nazareth, Israel, is expected to close in mid 2011.
Amos Netzer, chief executive officer of Shamir Optical commented, “This venture places Shamir Optical in a position to accelerate the development of new products and to strengthen its presence in the market place by using Essilor’s R&D capabilities, notably in coatings, and its worldwide distribution network. The transaction will create synergies and provide Shamir Optical with additional resources to invest in its development.”
Hubert Sagnieres, Essilor’s chief executive officer said, “This joint venture represents a strategic addition to Essilor’s business and will strengthen our offer to the mid-tier segment with additional high-quality products. Shamir Optical’s range of products fits closely with Essilor’s. Thanks to our existing network, respective expertise and the potential for vertical cost synergies, our partnership will allow us to grow the worldwide optical business with innovative, new value-added products and services and to expand our offer to eyecare professionals around the world. Shamir Optical will continue to produce and promote its brands, products and services as a separate business entity.”
Under the planned transaction, Shamir Optical will be delisted from the Nasdaq Global Market and the Tel Aviv Stock Exchange through a merger with a wholly owned subsidiary of Essilor by which all shareholders other than Kibbutz Shamir will receive cash for their shares. Essilor will simultaneously acquire for cash additional shares directly or indirectly from Kibbutz Shamir in order to reach 50 percent of Shamir Optical. The price offered for each transaction is $14.5 per Shamir Optical share. This price, together with the dividend of $0.804 payable to Shamir Optical shareholders of record on Nov. 8, 2010, represents a total value of $15.3 per share, corresponding to a 57 percent premium over the last 90 day average closing share price on Nasdaq of $9.75. The transaction will represent a cash investment of $130 million for Essilor, to be fully financed using Essilor’s existing committed credit facilities.
Shamir Optical’s board of directors and its audit committee have unanimously approved the terms of the proposed transaction and Shamir Optical’s board of directors has recommended it to Shamir Optical shareholders. Certain shareholders representing approximately 69.3 percent of Shamir Optical’s outstanding capital, including Kibbutz Shamir, have signed support agreements committing to vote in favor of the transaction at the special meeting of shareholders that will be called to approve the transaction.
The Merger Agreement contains certain termination rights for both Essilor and Shamir Optical and further provides that, upon termination of the Merger Agreement under specified circumstances, Shamir Optical may be required to pay Essilor termination fees of $11 million.
Shamir Optical expects to send its shareholders a shareholder information statement and proxy materials in connection with the meeting at which Shamir Optical's shareholders will be asked to approve the proposed merger.
Essilor will fully consolidate Shamir Optical upon closing. Based on current estimates, the transaction is expected to be accretive to Essilor’s earnings per share as of 2011 (before impact of the purchase price allocation).

[Fezz]

Will this affect your business strategies?


Not in the least!

[WFruit]

As long as Essilor doesn't mess up the Shamir lenses, probably not.

[Jacqui]

As I said on another thread "Another one for my DO NOT BUY list"

[Craig]

It is time to run our own business and who cares about the supplier of the day! This really has no impact on me or anybody I know; this is an investment for Essilor and just another day at the office.
We only have a few car companies in the world, why should optical be any different.
I worked at Omega Labs when Essilor made their first lab purchase and they have not stopped for the past 15+ years. I can say that we get better products for less money than ever before! I have had every major business partner get purchased by Essilor and just wish they bought a company I had to sell.
Maybe i should have stayed with them 18 years ago?

[Judy Canty]

It is time to run our own business and who cares about the supplier of the day! This really has no impact on me or anybody I know; this is an investment for Essilor and just another day at the office.
We only have a few car companies in the world, why should optical be any different.
I worked at Omega Labs when Essilor made their first lab purchase and they have not stopped for the past 15+ years. I can say that we get better products for less money than ever before! I have had every major business partner get purchased by Essilor and just wish they bought a company I had to sell.
Maybe i should have stayed with them 18 years ago?

...the sound of crickets chirpping "Signet Armorlite"....

[MikeAurelius]

I can say that we get better products for less money than ever before!

Really? And how much cheaper might they be now if the Big E didn't own them? And how much more widely would they be available if their market wasn't artifically reduced by the Big E? And how many more new products might there be if Big E didn't keep them from researching them?

Competition is a good thing. The Big E apparently doesn't like it, so they gobble up whole sections of the industry. They own or control better than 80% of the capacity in my area (Central Minnesota). That's definately NOT a good thing. When you don't have a choice, you get screwed, one way or another.

[kat]

Nope

[IndianaOD]

yup. I will be switching away form Shamir products.

[Johns]

We switched to Shamir products only in the last 6 months. 2 months ago, we switched over to Hoya. Why? Not because of the E thing, but we had such mixed results with Shamir, that we didn't know what to expect from on e pt. to another. It wasn't fitter error either, because we have no problems w/the Hoya, nor the Vlx. We dropped Vlx for obvious reasons.

Funny thing was, I called the Shamir rep before we switched over to Hoya, and he promised to stop by our offices and discuss it with the staff. Three weeks later, after no visit, I called the rep and he said that he had been too tied up w/ a big sales meeting, and when it was over, he was playing catch-up, but planned on stopping by soon. It's been 9 weeks, and no call, and no visit from Shamir. No need anymore...some problems just seem to take care of themselves.

[DragonLensmanWV]

I have one pair of Shamir lenses for my personal ones, but I have not sold any. I prefer the Hoya or Seiko digital lenses.

[MarySue]

When you don't have a choice, you get screwed

Mike, this comment isn't directed at you personally, but instead the "prevalent fear of Essilor" I see in many of the posts on optiboard.

As to the quote "when you don't have a choice ..." Everyone knows - there is always a choice - Essilor cannot, nor would they want to own everything. Will Hoya sell to Essilor? What about Carl Zeiss, Rodenstock? I find the "essilor-phobic" attitude of people on this forum irrational, illogical, and basically hillarious.

It's a bit like Obama bashing, or made in China slinging ...

What about Luxottica ... should we boycott them too?

Have a look at the headlines:

Luxottica eyes up $30m retail investment Robert Smith | Monday March 23, 2009

Luxottica Group S.p.A. is the world's largest eyewear company (Wikipedia)

Italy's Luxottica to acquire China's leading optical chain Date: Friday, July 8 2005

Luxottica acquires two prominent sun chains in South Africa Milan, Italy 03.23.2007 - 14:10

Luxottica purchased COACH according to the Wall Street Journal ... (5 October 2010)

I'll bet most will still proudly sell and display their Oakley collections....even though Luxottica owns them.

[DragonLensmanWV]

Well, to be truthful, I doubt there are as many formerly locally-owned labs in NZ that are getting bought up by the big E as there were here. That reduces competition by having fewer options.Don't forget that, once bought by E, the labs, by contract, have to promote E products above all else. Our (formerly privately owned labs until absorbed into the E) lab that we use sometimes for VSP now tells us anytime we try to order Hoya (or any other non-E product) that it's either unavailable or on perpetual back-order.
And many do boycott Lux, as I do and boycott E, as I do. Sure we're only a teeny drop in their Pacific-sized bucket, but we do what we can to support the companies that don't covet the entire market. What will be your thoughts when E buys Lux?
What would be your thoughts if there was only one place to buy any optical lenses? Or frames?

[Craig]

...the sound of crickets chirpping "Signet Armorlite"....

Why are the crickets chirping?

[MasterCrafter]

Mike, this comment isn't directed at you personally, but instead the "prevalent fear of Essilor" I see in many of the posts on optiboard.

As to the quote "when you don't have a choice ..." Everyone knows - there is always a choice - Essilor cannot, nor would they want to own everything. Will Hoya sell to Essilor? What about Carl Zeiss, Rodenstock? I find the "essilor-phobic" attitude of people on this forum irrational, illogical, and basically hillarious.

It's a bit like Obama bashing, or made in China slinging ...

What about Luxottica ... should we boycott them too?

Have a look at the headlines:

Luxottica eyes up $30m retail investment Robert Smith | Monday March 23, 2009

Luxottica Group S.p.A. is the world's largest eyewear company (Wikipedia)

Italy's Luxottica to acquire China's leading optical chain Date: Friday, July 8 2005

Luxottica acquires two prominent sun chains in South Africa Milan, Italy 03.23.2007 - 14:10

Luxottica purchased COACH according to the Wall Street Journal ... (5 October 2010)

I'll bet most will still proudly sell and display their Oakley collections....even though Luxottica owns them.

Dont kid yourself. Essilor would buy it all if they could. Have you ever heard of a monopoly?

For the right price Zeiss or Hoya would sell to them.

[MikeAurelius]

Mike, this comment isn't directed at you personally, but instead the "prevalent fear of Essilor" I see in many of the posts on optiboard.

As to the quote "when you don't have a choice ..." Everyone knows - there is always a choice - Essilor cannot, nor would they want to own everything. Will Hoya sell to Essilor? What about Carl Zeiss, Rodenstock? I find the "essilor-phobic" attitude of people on this forum irrational, illogical, and basically hillarious.

Hilarious?

Right now, in St. Cloud Minnesota, former home to Vision-Ease, and home to X-Cel Optical, and very many surfacing labs, the Big E OWNS OR CONTROLS better than 80% of the surfacing capacity here.

There are 4 independant labs left in town where there was 15.

Not quite so amusing any longer, is it?

E also owns/controls DAC, a major player in the supply business, one of (I think) 3 optical supply businesses in the US.

Shall I continue?

[Craig]

Really? And how much cheaper might they be now if the Big E didn't own them? And how much more widely would they be available if their market wasn't artifically reduced by the Big E? And how many more new products might there be if Big E didn't keep them from researching them?

Competition is a good thing. The Big E apparently doesn't like it, so they gobble up whole sections of the industry. They own or control better than 80% of the capacity in my area (Central Minnesota). That's definately NOT a good thing. When you don't have a choice, you get screwed, one way or another.

The industry needed consolidation to develop better delivery systems and the US market just joined the rest of the world. The labs in Europe only sell their own products and controlling the process fro A to Z lends itself to a more effective system. Our labs were putting Zeiss coatings on a Hoya lens and this is just not an ideal situation for coatings.
If you know how to buy, the opportunity to use great products that were developed using Essilor technology for 1/3 the price is very appealing to me and my business.
Our lens margins are the highest they have ever been and we are delivering amazing products without raising prices.

Craig

[MarySue]

We have 4 million people (so littlish) and we have Essilor, Hoya, Rodenstock, Carl Zeiss, ILS, and Lensworx, and and Australian lab I can never remember the name of ... they used to be LensBiz. Essilor did buy OLAB and PROLAB and to be fair, they provide the best customer service, employ dispensing opticians in quality control, as reps, and are training many of their lab techs through the optical mechanics course.

Essilor have changed a lot in the last 5-6 years. They used to have the slowest delivery time, the poorest fitting, and customer service was really an issue. I owned a practice paying them a nice chunk of money every month. My business partner and I quit using them due to delivery times and service horrors. I have to hand it to them though - they have really pulled out all the stops to be at the top of the game here now.

I guess the overall point is - use the right lens for the patient - regardless of who makes it. I love hoya, rodenstock, zeiss, essilor, etc when it is appropriate for the patient.

[MasterCrafter]

The industry needed consolidation to develop better delivery systems and the US market just joined the rest of the world. The labs in Europe only sell their own products and controlling the process fro A to Z lends itself to a more effective system. Our labs were putting Zeiss coatings on a Hoya lens and this is just not an ideal situation for coatings.
If you know how to buy, the opportunity to use great products that were developed using Essilor technology for 1/3 the price is very appealing to me and my business.
Our lens margins are the highest they have ever been and we are delivering amazing products without raising prices.

Craig

Yea Sounds great. Lets just put more labs out of business and consolidate them down and put more people out of work. Sounds like a great idea. We could also put all the brick and mortar optical places out of business to consolidate and get everything online and cut out the middle man.

[MikeAurelius]

The industry needed consolidation to develop better delivery systems and the US market just joined the rest of the world. The labs in Europe only sell their own products and controlling the process fro A to Z lends itself to a more effective system.

Ok...but it is also ILLEGAL in the US to do so. That's what happened with the Railroad barons, the oil companies, etc. That's why Taft-Hartley and other anti-monopoly legislation came to pass.

Plus the break up of the phone companies...

What happens in Europe is not the rule for what happens in the US. If they start jumping in the ocean, will you follow them?

[MikeAurelius]

We have 4 million people (so littlish)

Minnesota's population as of 2009 is 5.2 million. And E owns 80% of the surfacing capacity in this state.

[NeGlassesGirl27]

Well that's disappointing. :( I bounce back and forth between Autograph and Physio 360 but I've been using more Ellipse 360. I, personally, have 2 pairs of Autograph SV and I absolutely love them. I also really like our Shamir rep for this area. She helps you out when you need it, she comes in when said schedule time is booked and is very personable. Stupid big companies! I wish I had so much money I could buy whatever I want :bbg:

[drk]

Johns, how's that Hoya thing working out for you?

[MarySue]

Dont kid yourself. Essilor would buy it all if they could. Have you ever heard of a monopoly?

For the right price Zeiss or Hoya would sell to them.

Is cynicism and aversion of capitalism a normal USA personality trait? Have you forgotten we Americans created captialism?

(Before reading ... Insert Tongue into Side of Cheek) I say back to our roots, be more like Henry Potter than George Bailey. Or should we become solcialists? Maybe communism would work? World wide success is evil. Rid the world of them all!!! Off with their heads!!! Essilor, Zeiss/Sola, J&J, B&L, CIBA, WAL-MART, K-MART, McDonalds, and Starbucks!

Again - moral of the story, buy and sell the best lens design for your client.

Thanks for the chuckle :cheers:

[MikeAurelius]

Is cynicism and aversion of capitalism a normal USA personality trait? Have you forgotten we Americans created captialism?

Not at all, as long as it is done LEGALLY.

Open competition vs limited competition vs no competition. E seems to be bent on moving into #2 with #3 as its final goal. They've pretty much achieved it in parts of Europe, but if there is enough resistance, perhaps it can be reversed here in the US.

The independant lab offers a very wide variety of products to its customers. The non-independant only offers what they are told they can carry. So the customer (and therefore the patient) has less to choose from.

Many of us would like to see Wally World (what you call Wal-Mart) go away. K-Mart? Mickey-D's? Nah. They both have plenty of competion which keeps them in line. But what happens when the tipping point is reached and E no longer has to worry about outside competition? How many corp labs will be shuttered because of duplication of services? How many people will be laid off/fired? How many products will then be left available to the consumer?

You can't sell the best lens design for your patient if you are tied to only one supplier who decides what to sell you.