Latest on Essilor/Lux merger ................................

**Chris Ryser** · 09-05-2018, 01:26 AM

With longer road to merger approvals, companies must weigh risk of delay
JOHN BODRUG
CONTRIBUTED TO THE GLOBE AND MAIL
PUBLISHED SEPTEMBER 4, 2018 UPDATED 6 HOURS AGO

As global M&A activity continues to grow, so too does the merger review timeline for complex multinational deals. In some cases, the review process can extend well over a year. Eyewear maker Luxottica and ophthalmic lens maker Essilor recently announced that they expect to close their merger in late September after receiving clearance in China, more than 18 months after announcing their proposed transaction in January, 2017. Similarly, Dow/Dupont and Bayer/Monsanto each took about 20 months to obtain regulatory clearances, while Agrium/PotashCorp took about 15 months. In Canada, the Competition Bureau’s average review time for complex mergers has increased from about 36 days in 2015-16 to almost 53 days in 2017-18.

In light of this trend, companies considering embarking on a merger transaction may need to prepare for a lengthy – and potentially costly – period of uncertainty. Pending regulatory approvals, the businesses normally cannot be integrated, creating challenges for managers while competitors seek to exploit the uncertainty by targeting key employees, customers and suppliers.

One reason for some of these delays is that competition authorities are increasingly looking beyond the typical “horizontal” competition issue, which focuses on whether the parties are direct competitors and whether the merger will allow the new entity to raise prices in the markets in which the parties compete.

They are now also more closely scrutinizing “vertical” mergers between a customer and a supplier, as in the case of Luxottica and Essilor. While Luxottica and Essilor each have some retail operations, their businesses are largely complementary: Luxottica sells eyewear while Essilor makes lenses. Consequently, the focus of global competition regulators appears to have been on whether the transaction would allow the merged entity to foreclose competition in lenses or frames by tying or bundling their products together or otherwise restrict access to their products by downstream competitors.

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**Lab Insight** · 09-05-2018, 05:28 AM

Last paragraph, product restriction is already occurring. Back orders and brand blockage from Lux for independents, yet their affiliates have full access and no delays. I'm certain Clearly will also soon be flooding the market selling rayban bundled with transitions.

Essilor has also categorized themselves into 'blue' or 'gray' meaning blue is a true Essilor lab, and gray is an Essilor owned affiliate. Their high end products such as Varilux X or S series are usually only sold through a blue lab, and are not listed on the gray lab's price list.

**GrahamEye** · 09-05-2018, 06:38 AM

Originally Posted by Lab Insight

Last paragraph, product restriction is already occurring. Back orders and brand blockage from Lux for independents, yet their affiliates have full access and no delays. I'm certain Clearly will also soon be flooding the market selling rayban bundled with transitions.

Could the blockage be the reason my two Lux reps aren't returning my calls?
One completely no showed on our last frame appointment and still has yet to return my phone calls.

**Lab Insight** · 09-05-2018, 07:08 AM

Originally Posted by GrahamEye

Could the blackage be the reason my two Lux reps aren't returning my calls?
One completely no showed on our last frame appointment and still has yet to return my phone calls.

I'm sure the reps are running scared right now wondering about their futures once the synergies have taken place. Let's be honest, frames sell themselves but lenses require technical expertise and some skill.

The fact they are in hiding is rather unprofessional. Or perhaps he or she is already departed?

**Tallboy** · 09-05-2018, 07:41 AM

Originally Posted by Lab Insight

Essilor has also categorized themselves into 'blue' or 'gray' meaning blue is a true Essilor lab, and gray is an Essilor owned affiliate. Their high end products such as Varilux X or S series are usually only sold through a blue lab, and are not listed on the gray lab's price list.

I don't do a ton of varilux but I do one every once and a while or when requested - I have not run into this problem at all yet? Both the independent family own lab I mostly use has full access to everything (including X and Sapphire AR) and the Essilor Partner lab I use sometimes seems to have it all as well.

**Chris Ryser** · 09-07-2018, 02:00 AM

Originally Posted by Tallboy

Both the independent family own lab I mostly use has full access to everything (including X and Sapphire AR) and the Essilor Partner lab I use sometimes seems to have it all as well.

Anybody that has a good credit rating with a supplier is always welcome to purchase what the want and need.

Being partner lab means that they have been paid for a portion of their business, or that they owe a lot of money to the supplier.

**Brad Nelson** · 10-11-2018, 07:26 PM

I don't know how many people have heard but Essilor just bought a couple more labs. They just acquired Midwest optical in Chicago. They plan to close it in the beginning of 2019. It's just another business that Illinois will lose.

**Tallboy** · 10-11-2018, 07:42 PM

Originally Posted by Brad Nelson

I don't know how many people have heard but Essilor just bought a couple more labs. They just acquired Midwest optical in Chicago. They plan to close it in the beginning of 2019. It's just another business that Illinois will lose.

I wonder if it was a true buyout just to shut it down or if it was like Chris mentioned - they owed more money to Big E then they could afford to pay back.

**Chris Ryser** · 10-12-2018, 12:56 AM

Originally Posted by Tallboy

I wonder if it was a true buyout just to shut it down or if it was like Chris mentioned - they owed more money to Big E then they could afford to pay back.

As per the last year end report they will expand their online services in every way. So they might keep this one and if they have already some service lab in the area, they just might close it down or move it to another location.

They projected a strong effort to concentrate on the online optical market, and widen it. We just have to wait and see, maybe prepare what is coming at us, with the older generation dying off and the baby boomers with their cell phones taking over.

There might be for sure some adjusting period right after the merger if all the planning for the future is not all ready.

**Chris Ryser** · 10-12-2018, 01:07 AM

Originally Posted by Tallboy

I wonder if it was a true buyout just to shut it down or if it was like Chris mentioned - they owed more money to Big E then they could afford to pay back.

As per the last year end report they will expand their online services in every way. So they might keep this one and if they have already some service lab in the area, they just might close it down or move it to another location.

There might be for sure some adjusting period right after the merger if all the planning for the future is not all ready.

**Chris Ryser** · 10-14-2018, 02:05 AM

Essilor has many value chains and distribution channels – for delivering finished or semi-finished products to customers, supplying optical chains that have their own laboratories and also distributing products directly online. Each day the Group manages more than 3,000 lens flows and over 1 million product references.

To manage this, Essilor has a network of 33 production sites, 16 distribution centers and 490 prescription labs. This flexible and robust supply chain enables Essilor to scale its offer to provide a responsive service to meet local demand.

Beyond producing 580 million corrective lenses and 135 million pairs of sunglasses and reading glasses per year, Essilor has continued to create new solutions to help its customers grow. For independent eye care professionals these can range from high-tech dispensing technologies, programs to improve in-store communication and selling techniques to offers that combine lenses and frames and associated services. For major retail players Essilor provides services such as supplying and managing frame stocks, store planning preparation to complete services covering edging, mounting and in-store order tracking.

Essilor now has four integrated platforms in Bangkok (Thailand), Dallas(US), Shanghai (China) and Warsaw (Poland) which manage more than 95 service offerings supporting key accounts worldwide.

source: copied from their website