A legal fight has broken out between EssilorLuxottica and its €7bn Dutch takeover target, GrandVision.
EssilorLuxottica said on Saturday that it had started legal proceedings in the Netherlands to access information allowing it “to assess the way GrandVision has managed the course of its business during the Covid-19 crisis, as well as the extent to which GrandVision has breached its obligations,” under the merger agreement.
The maker of Ray-Ban and Oakley glasses said that “despite repeated requests, GrandVision has not provided this information on a voluntary basis, leaving it with no other option but to resort to legal proceedings.”
GrandVision said it strongly disagreed with EssilorLuxottica’s demands “and has full confidence that these claims will be rejected in court”. It denied that it had broken the terms of the so-called support agreement.
EssilorLuxottica agreed to buy rival GrandVision almost a year ago — snapping up a 76.2 per cent stake in Europe’s largest operator of opticians from Hal Holding — in the hope of adding more than 7,400 stores globally and more than 39,000 employees to the group.
However, the deal has come under scrutiny from European competition authorities — who suspect it could lead to reduced competition and higher prices for consumers. Smaller rivals are also arrayed against it.
Ahead of a crucial, and extended, deadline of August 27 when regulators must decide whether to clear the purchase of the Dutch group, the EU is demanding that EssilorLuxottica sell retail stores to get the deal through, something it is resisting.
Although people close to EssilorLuxottica say the industrial logic of the deal remains solid, there is concern about the price after GrandVision’s shares fell towards €25 in recent months, below the €28 purchase price agreed with Hal.
The concessions being sought by the EU could see EssilorLuxottica, — itself created in a 2017 merger that attracted competition scrutiny — push to renegotiate the price, as could information about how GrandVision’s business has suffered during the pandemic.
Other mergers have fallen through due to Covid, including the planned $9bn acquisition of Bermuda reinsurer PartnerRe by France’s Covéa.
In its statement on Saturday, GrandVision said it “continues to support EssilorLuxottica with the shared objective to obtain regulatory approval for the closure of the transaction within 12 to 24 months from the announcement date of 31 July 2019.”
Hal could not immediately be reached for comment.
EssilorLuxottica’s share price has fallen 13 per cent this year, with the pandemic weighing on the price and a governance tussle between the two sides of the group, over the pending appointment of a new chief executive continuing to lurk in the background.