Morningstar

Luxottica-Essilor Merger to Create Eye-Care Giant

We are leaving our moat ratings and individual valuations unchanged, with both stocks trading in line with our fair value estimates.

Securities In This Article
Essilorluxottica
(EL)

On Jan. 16, 2017,

The merger will create a company with EUR 15 billion in revenue, EUR 3.5 billion in EBITDA, and net debt/EBITDA of 0.9 times (as per 2015 results). The combined entity will remain conservatively financed, as no additional debt will be issued concurrently with the merger. Both companies see the benefits of integration in speeding up the supply chain, developing new markets, and combining research and development efforts that would result in a more competitive product offering. There are also revenue and cost synergies to the tune of EUR 400 million-600 million over the medium term and accelerating over the long term. Revenue synergies account for roughly half of the total amount.

The companies expect the merger to close in the second half of 2017, following antitrust and other regulatory and shareholder approvals.

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About the Author

Jelena Sokolova, CFA

Senior Equity Analyst
More from Author

Jelena Sokolova, CFA, is a senior equity analyst, Europe, for Morningstar*. She covers the consumer discretionary/luxury goods sector. She is a lead analyst for the sector, performing in-depth fundamental analysis and DCF modeling resulting in investment ideas tailored to long-term investors and analyzing the durability of company competitive advantages based on Morningstar proprietary “moat” methodology. Since 2023 she is a member of the Moat Committee, assessing competitive strengths across sectors.

Before joining Morningstar in 2016, Sokolova worked as a senior equity analyst at CE Asset Management in Zurich covering European large caps. Having started as an analyst for CE Asset Management office in Riga in 2010, Sokolova got promoted to a Senior Analyst position in 2013 covering European Large cap stocks with a generalist focus, reporting to CE Asset Management Investment Committee.

Sokolova holds a bachelor’s degree in Business Administration from the Banking Institution of Higher Education, Riga. She also holds a a master's degree in international business from Riga International School of Economics and Business Administration. She also holds the Chartered Financial Analyst® designation.

* Morningstar UK Ltd (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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