Follow me here for a second...E paid $1.73 billion cash plus $125 million deferred, so let's say $1.9 billion total paid for the other 51% of Transitions. In other words, they paid $1.9 billion for 51% of an $850 million annual revenue stream. If Transitions drops about 11% to 12% to the bottom line like the rest of E, that means the they will add an additional $40 million in annual profits. Multiply this by their extremely inflated PE of 31 and you get a value of $1.2 billion. So this must mean that in order to be "accretive" (as noted above) Transitions must drop something like 17% to the bottom line.
Looking at it another way, E has a market cap of about $24 billion. If 100% of transitions is worth $3.7 billion, then Transitions is 15% of the value of E. When you think of all that E owns, that seems like an awful lot of value attributed to transitions.
As E notes in this presentation
http://www.essilor.com/en/Investors/...ts_Essilor.pdf (see slide 30) Transitions growth has slowed and there is new competition.
But what do I know. These guys know how to play ball (or soccer or whatever it is they play in France). Despite all the acquisitions, they still have a debt to equity ratio well under 1.0. One would assume that a company that has done all of the acquisitions that they have done would be strapped with a ton of debt, but that is clearly not the case. That is pretty good considering this is a business brought to us by the people that built the Maginot Line.
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