EssilorLuxottica Said to Be Reconsidering GrandVision Deal

(Bloomberg) -- EssilorLuxottica SA, the maker of Ray-Ban sunglasses, is reconsidering its agreed 7.3 billion-euro ($8.8 billion) purchase of optical retailer GrandVision NV on legal and pandemic concerns, people with knowledge of the matter said.

The Franco-Italian company has become increasingly worried about the way the Covid-19 crisis has impacted GrandVision’s business, the people said, asking not to be identified as the matter is private.

The Dutch company’s shares have declined about 6% this year to 25.90 euros, giving it a market value of 6.6 billion euros. That compares to the agreed purchase price of at least 28 euros in July 2019.

While EssilorLuxottica still sees the rationale of the deal, the changing business environment and a subsequent legal tussle with GrandVision have led it to consider its options, including renegotiating price or even walking away from the transaction, according to the people. Under the deal terms, EssilorLuxottica could be liable for a 400 million-euro termination fee.

Any threat to reconsider the acquisition could put pressure on GrandVision’s owner HAL, which is controlled by the billionaire Van der Vorm family, to agree to different terms. Deliberations are ongoing and no decisions have been made as the companies work to gain regulatory approvals for the deal, the people said.

A representative for EssilorLuxottica declined to comment. A representative for GrandVision said the company continues to believe in the deal’s strategic rationale and would work with the buyer toward a successful completion, declining to comment further.

Crisis Management

The purchase of Netherlands-based GrandVision was intended to help solidify EssilorLuxottica’s dominance in the global eyewear market by adding a network of more than 7,000 stores in over 40 countries. However, relations between the two companies have soured since they agreed to the transaction.

EssilorLuxottica started court proceedings in July against GrandVision to obtain information on how the company was managing its business through the crisis. EssilorLuxottica said the target had failed to provide the requested details after repeated requests. GrandVision said it disagrees with the demands, and a Dutch court later ruled in its favor.

Already the world’s biggest eyewear company, EssilorLuxottica has seen a boost in online sales during the pandemic. That has made the purchase of a smaller retailer less attractive for the company, according to the people familiar with the matter.

EssilorLuxottica owns the LensCrafters and Pearle Vision chains in the U.S. While the group’s revenue declined about a fifth in the first nine months of the year, online sales rose 40% to a record 878 million euros.

The coronavirus pandemic has already impacted other large takeovers, including French luxury retailer LVMH Moet Hennessy Louis Vuitton SE’s purchase of U.S. jeweler Tiffany & Co., which was renegotiated at a lower price. Elsewhere, Exor NV’s planned $9 billion sale of its PartnerRe reinsurance business collapsed after it turned down a request by France’s Covea to change the terms.

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