Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive: Third Point builds stake in Ray-Ban maker EssilorLuxottica - sources

Stock MarketsAug 25, 2019 04:34PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Sunglasses from Ray-Ban are on display at an optician shop in Hanau

By Svea Herbst-Bayliss and Claudia Cristoferi

(Reuters) - Third Point LLC, the U.S. hedge fund that has pushed for changes at companies ranging from Nestle SA (S:NESN) to Campbell Soup Co (N:CPB), has amassed a stake in Ray-Ban maker EssilorLuxottica SA (PA:ESLX), people familiar with the matter said on Sunday.

Third Point, run by billionaire investor Daniel Loeb, is targeting EssilorLuxottica amid a power struggle inside the world's largest lenses and glasses manufacturer, following its formation last year through a 48 billion euro ($53 billion) merger of France's Essilor and Italy's Luxottica.

Billed as a merger of equals, it degenerated into a battle over control between Luxottica's founder Leonardo Del Vecchio and Essilor's chief Hubert Sagnieres. The two sides announced a truce in May, but the company still faces uncertainty as it searches for a CEO that can deliver on the merger's promised annual savings of 600 million euros.

Third Point has met with Del Vecchio, who is now EssilorLuxottica's executive chairman and owns about a third of the company, according to two of the sources. Details of the meeting and on Third Point's exact stake could not be learned.

Third Point has a track record of calling on operational improvements at companies where their stock could be buoyed by a different strategy, although is not clear what stance the New York-based hedge fund will adopt on how EssilorLuxottica should be run. Third Point is still in the process of buying EssilorLuxottica shares, one of the sources said.

The sources requested anonymity because Third Point's investment in EssilorLuxottica is confidential. EssilorLuxottica, which has a market capitalization of 57 billion euros, and Third Point declined to comment.

A representative for Delfin, Del Vecchio's holding company, also declined to comment.

The Essilor and Luxottica camps were supposed to have equal weighting in the combined company's leadership under an agreement which expires in 2021.

Tensions surfaced last November, when Del Vecchio appeared to tap his right-hand man and Luxottica Chief Executive Francesco Milleri as the next CEO.

The dispute came to a head in March, when Del Vecchio's Delfin said it would seek arbitration in the International Chamber of Commerce, prompting Essilor to ask a Paris court to nominate an outside mediator.

Investors, including Baillie Gifford, Comgest, Edmond de Rothschild Asset Management, Fidelity International, Guardcap, and Phitrust et Sycomore Asset Management, argued that the corporate integration was being undermined by a "major crisis of governance." Their effort to install independent directors on EssilorLuxottica's board failed in a shareholder vote.

In May, the two sides agreed to end their legal feud. Del Vecchio and Sagnieres made Milleri and Laurent Vacherot, EssilorLuxottica's current CEO, jointly responsible for overseeing the integration process and define strategy.

They set a deadline of finding a new CEO by the end of 2020. Milleri and Vacherot agreed not to put forward themselves for the job.

In a sign that the two camps have put some of their differences aside, EssilorLuxottica said last month it would acquire Dutch opticians group GrandVision NV (AS:GVNV) for up to 7.2 billion euros in cash.

GrandVision, whose chains include Vision Express in Britain and For Eyes in the United States, would give EssilorLuxottica control of more than 7,000 outlets across the world where it already sells brands including Varilux lenses and Ray-Ban sunglasses. Other EssilorLuxottica brands include Oakley, Persol and Oliver Peoples.

The deal is likely to face intense scrutiny by competition regulators. The European Union only approved the merger of Essilor and Luxottica after a long study.

CHALLENGING CONGLOMERATES

Third Point, which has $15 billion in assets under management, has spent this year taking on some of the world's largest conglomerates, and has told investors that it plans to make more activist investments where it feels it has an edge.

In June, it called on Sony Corp (T:6758) to spin off its semiconductor business and sell off stakes in Sony Financial and other units, in order to position itself as a leading global entertainment company.

It also urged United Technologies Corp (N:UTX) to cancel its aerospace merger with U.S. defense contractor Raytheon Co (N:RTN), calling the deal "ill conceived." Earlier this month, the fund disclosed it trimmed its stake in United Technologies.

In the first half of 2019, Third Point's flagship fund earned a 13.1% return, fueled by gains at many of its activist positions ranging from Nestle to Sony.

Exclusive: Third Point builds stake in Ray-Ban maker EssilorLuxottica - sources
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email