As we recap of the biggest consumer and retail stories of 2017, the Motley Fool Industry Focus team brings listeners up to speed on the proposed mega-merger between French prescription lens giant Essilor International (NASDAQOTH: ESLOY) and Italian eyeglass powerhouse Luxottica Group (NYSE: LUX).
Continue Reading Below
A full transcript follows the video.
10 stocks we like better than Luxottica Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Luxottica Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of December 4, 2017
Continue Reading Below
This video was recorded on Dec. 19, 2017.
Vincent Shen: We start in January, when Luxottica and Essilor announced a $50 billion merger. Both were leaders in the eyewear industry, though they occupied separate but complementary corners of the market. Luxottica is best known for making frames, what feels like every major fashion brand out there, in addition to operating a network of retail storefronts -- think LensCrafters and Sunglass Hut. They also manage EyeMed, which is the vision benefits provider for something like 40 million people.
In the opposite corner, we have Essilor, which was a specialist in making lenses and optical equipment. This is intended to be a merger of equals, Luxottica is based in Italy, Essilor in France, with an evenly split board of directors and shared management. What's the latest on this deal?
Asit Sharma: The latest is, the deal looks like it's going to go through. Listeners who were with us in January, I know you're thinking, wait a minute, isn't this deal done yet? We talked about this 12 months ago! But what's good for corporations isn't necessarily always good for consumers. And both the European Commission and the FTC have looked at this deal very carefully to make sure that consumers in their respective regions don't get hurt. The latest is that it looks to be approved by both trade organizations and March is when we'll probably see the European Commission, the slower of the two, finally give a thumbs up. In the meantime, this year, Essilor is up 20%, Luxottica up 13%. Listeners, the lesson here is, in these huge mergers, there's always some antitrust risk. So even buying stocks on a good idea, you're going to incur a little bit of that risk. This story looks like it's going to have a happy ending.
Shen: Yeah, we have regulatory approvals from markets like Canada, Australia, Russia, and Japan. The European commission, as you mentioned, Asit, should make a decision by next March. Both it and the U.S. are expected to OK the deal without any major concessions or conditions.
Then, looking ahead, to end on this segment, assuming the deal goes through, I think the integration process will be important for investors to follow. There is some uncertainty in terms of the top management for the combined entity. Current head honcho at Luxottica, Leonardo del Vecchio, and his counterpart at Essilor -- that beeping is our time -- Hubert Sagnières, they've both indicated at their ages, they're grooming the proper people to run the company in the future. But there's a little bit of murkiness in terms of the leadership there, and that's something that investors should follow.
Asit Sharma has no position in any of the stocks mentioned. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.