Dec 16 2009
Essilor International and FGX International Holdings Limited today announced that they have signed an agreement whereby Essilor will acquire FGX International, the leading designer and marketer of non-prescription reading glasses in the United States.
Headquartered in Smithfield, Rhode Island, FGX International reported 2008 revenue of $256 million, generated mainly in the US and Canada, and has approximately 375 full-time employees. Its products, which also include sunglasses, are sold in over 68,000 retail locations, including mass merchandisers, drugstores, ophthalmic retailers and department stores. FGX International has a portfolio of highly recognized eyewear brands, including Foster Grant(R), Magnivision(R), Angel(TM), Gargoyles(R), Anarchy(R), SolarShield(R), PolarEyes(R) and Corinne McCormack(R), and also holds licenses for brands such as Ironman(R), Levi Strauss Signature(R), Body Glove(R) and C9 by Champion(R).
"This acquisition is in line with Essilor's strategy of procuring the resources needed to provide a quality offering that covers different eyewear market segments around the world in order to meet a wide range of needs. It also strengthens the company's business base and enhances its growth prospects," said Hubert Sagnieres, Essilor's COO and CEO designate. "Demand for non-prescription reading glasses is growing. In addition, the market fits well with our prescription lens business and is supported by favorable demographic trends. FGX will benefit from our international distribution network while we will leverage FGX's brands and expertise to deploy this new offering around the world."
Alec Taylor, CEO of FGX International commented "This proposed merger is of major significance to FGX International. Essilor's global reach will be of considerable strategic value to market our products on a worldwide basis and will greatly enhance our competitive position. Essilor's global footprint will allow us to expand our presence in Europe, Asia and other parts of the world, while continuing to focus on growing our North American sales in over-the-counter reading glasses and popular-priced sunglasses. We also find the Essilor culture compelling and a good fit with ours. We believe this transaction represents a significant value for our shareholders."
The all-cash transaction is valued at approximately $565 million, including the repayment of FGX's net debt of approximately $100 million. This transaction price represents $19.75 per FGX International share.
Under the terms of the agreement, which has been approved by both companies' Boards of Directors, FGX International will be merged with a wholly owned subsidiary of Essilor. In addition to the merger agreement, certain shareholders representing approximately 33% of FGX's outstanding stock, including Berggruen Holdings North America Ltd and the company's senior management, have signed support agreements committing to vote in favor of the transaction at the special meeting of shareholders that will be called to approve the transaction.
The transaction, which is subject to regulatory approvals and the affirmative vote of a majority of FGX's shareholders, is expected to close in 2010.
The transaction will be financed using Essilor's cash reserves and existing committed credit facilities.
Based on current estimates, the transaction is expected to be accretive to Essilor's earnings per share in 2010 (before impact of the purchase price allocation) and accretive in 2011.