Essilor and Delfin announced the signing of an agreement designed to create an integrated player dedicated to visual health and superior consumer experience through a combination of Essilor [Euronext Paris: EI] and Luxottica Group [MTA: LUX; NYSE: LUX]. Together, Essilor and Luxottica will be in a stronger position to address the vision needs of the 7.2 billion people in the world out of which 2.5 billion people still suffer from uncorrected vision problems. This transaction would allow the combined group to better seize growth opportunities resulting from strong demand in the eyewear market, driven by the increasing need for corrective and protective eyewear and the appetite for strong brands. The combination would create a key player, operating across all segments of the eyewear industry. The new entity would leverage state-of-the-art production capabilities and widespread distribution networks to better serve clients and deliver value to all stakeholders. Together, Luxottica and Essilor would have more than 140,000 employees and sales in more than 150 countries. Based on the companies’ 2015 results, the new company would have posted combined net revenues of more than €15 billion and combined net EBITDA of approximately €3.5 billion. The two groups share common values: their mission is to improve vision across the world with innovation as a growth driver, operational excellence, an entrepreneurial spirit and an international mindset. Based on a preliminary analysis, the combined group is expected to progressively generate revenue and cost synergies ranging from €400 million to €600 million in the medium term and accelerating over the long term. It will also benefit from a robust balance sheet and strong cash flow generation, giving it the financial flexibility to invest in its future growth both externally and internally. Since its creation in 1961, Luxottica has built an outstanding portfolio of proprietary eyewear brands, including Ray-Ban® and Oakley® , and prestigious licensed brands, loved by consumers everywhere. Luxottica operates a well-developed retail and wholesale network in both developed and emerging markets, along with innovative e-commerce platforms, engaging a new generation of digital consumers. State-of-the-art manufacturing footprint makes up the backbone of the company, where the most advanced R&D, equipment, materials and processes are used to make frames that are excellent in quality and style. Essilor succeeded in bringing innovative solutions to ophthalmic lenses and creating internationally-recognized brands (Varilux® , Crizal ® , Transitions® ) offering tailored correction solutions for all of its consumers’ needs. Leveraging its cutting-edge methods, Essilor also developed new approaches in the sunwear segment and online retail. Page 3 of 7 N e w s R e l e a s e – J a n u a r y 1 6 , 2 0 1 7 Transaction Terms The transaction would entail a strategic combination of Essilor’s and Luxottica’s businesses consisting of (i) Delfin contributing its entire stake in Luxottica (approx. 62%) to Essilor in return for newly-issued Essilor shares to be approved by the Essilor shareholders meeting, on the basis of the Exchange Ratio of 0.461 Essilor shares for 1 Luxottica share, and (ii) Essilor subsequently making a mandatory public exchange offer, in accordance with the provisions of Italian Law, to acquire all of the remaining issued and outstanding shares of Luxottica pursuant to the same Exchange Ratio and with a view to delist Luxottica’s shares. Essilor would become a holding company with the new name “EssilorLuxottica” via a hive-down of all of its operating activities into a wholly-owned Company, to be called Essilor International, and the contribution by Delfin of its Luxottica shares. Following the transaction, Delfin would own between 31% and 38%1 of the shares of EssilorLuxottica and would be its largest shareholder. The voting rights of any shareholder of EssilorLuxottica would be capped at 31% and there would no longer be double voting rights for the shares. The transaction is subject to Essilor’s Works Councils’ information and consultation procedure according to French law. The Board of Directors of Essilor held on January 15, 2017 unanimously approved the agreement with Delfin, which it considered to be in line with the best interests of shareholders, employees and other stakeholders, and decided to initiate the information and consultation of its works councils on the basis of such proposed transactions. The Board of Directors of Luxottica, held on the same day, unanimously acknowledged that the transaction is in the best interest of Luxottica and shared the strategic rationale of the business combination. Leadership, governance and structure of the new entity Luxottica’s Executive Chairman, Leonardo Del Vecchio, would serve as Executive Chairman and CEO of EssilorLuxottica. Essilor Chairman and CEO, Hubert Sagnières, would serve as Executive Vice-Chairman and Deputy CEO of EssilorLuxottica with equal powers as the Chairman and CEO. Leonardo Del Vecchio and Hubert Sagnières would also keep their positions of Executive Chairman of Luxottica and Chairman and CEO of Essilor International, respectively. The EssilorLuxottica Board of Directors would consist of sixteen members: Eight members nominated by Essilor, comprising Hubert Sagnières, two employee representatives, one Valoptec representative and four independent members Eight members nominated by Delfin, comprising Leonardo Del Vecchio, three Delfin representatives and four independent members ----------- 1 Depending on the acceptance rate of the exchange offer. 31% assumes 100% acceptance rate of the exchange offer. Page 4 of 7 N e w s R e l e a s e – J a n u a r y 1 6 , 2 0 1 7 Essilor International, after completing the hive-down noted above, and Luxottica would maintain their respective Board of Directors. An integration committee would be implemented to ensure smooth and successful integration of the two companies.
About Essilor: The world’s leading ophthalmic optics company, Essilor designs, manufactures and markets a wide range of lenses to improve and protect eyesight. Its mission is to improve lives by improving sight. To support this mission, Essilor allocates more than €200 million to research and innovation every year, in a commitment to continuously bring new, more effective products to market. Its flagship brands are Varilux® , Crizal® , Transitions® , Eyezen™, Xperio® , Foster Grant® , Bolon™ and Costa® . It also develops and markets equipment, instruments and services for eyecare professionals. Essilor reported consolidated revenue of more than €6.7 billion in 2015 and employs 61,000 people worldwide. It markets its products in more than 100 countries and has 32 plants, 490 prescription laboratories and edging facilities, as well as five research and development centers around the world. For more information, please visit www.essilor.com. The Essilor share trades on the Euronext Paris market and is included in the Euro Stoxx 50 and CAC 40 indices. Codes and symbols: ISIN: FR0000121667; Reuters: ESSI.PA; Bloomberg: EI:FP.