Luxottica to Acquire Brazilian Eyewear Company, Tecnol

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MILAN and CAMPINAS, Brazil— Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX) and Grupo Tecnol Ltda, a leading Brazilian eyewear company, have signed an agreement for Luxottica to acquire 100 percent of Grupo Tecnol capital. According to Luxottica, the acquisition is expected to close by the beginning of 2012 and under the terms of the purchase agreement, Luxottica will initially acquire 80 percent of Grupo Tecnol capital with the remaining 20 percent purchased over the next four years, at 5 percent per year, at pre-determined prices. The enterprise value of Tecnol is approximately €110 million.

The acquisition will include Tecnol’s production plant in Campinas, a portfolio of house and licensed brands, a wholesale distribution network that covers approximately 15,000 doors in Brazil through a network of distributors and representatives, the Oticas Iris optical retail chain of 90 stores in San Paolo and a centrally located edging laboratory.

“This operation perfectly fits into our long-term growth strategy,” said Andrea Guerra, CEO of Luxottica. “Brazil is one of the countries where Luxottica aims at being as ‘domestic’ as it is in Italy, having deep local roots and investing in people, activities and culture. Tecnol is the best possible partner for us to strengthen our presence in Brazil and in Latin America as a whole, as it has the same vision, the same approach to excellence in serving consumers and the same vertically integrated business model.”

Established in 1972, Grupo Tecnol is today the main integrated player in the eyewear market in Brazil. In 2010, it posted net sales of approximately €90 million, with an average growth rate of approximately 14 percent over the last three years. Their brand portfolio includes local house brands Platini, Jean Monnier and Tecnol, as well as licensed brands for the Brazilian market. According to Luxottica, Brazil, and more generally Latin America, represents a key region for their future development.

Currently, Brazil is one of the top ten countries for Luxottica’s wholesale division with an average price per unit higher than in Europe. A statement from the company said, that going forward, “Luxottica will leverage this acquisition to establish a major presence in the core of the Brazilian market, the fast growing ‘premium’-tier business, that is one of the most relevant opportunities in the world for the eyewear business, both in terms of size and scope, with an average price comparable to Europe.”

Luxottica expects that the benefits of this transaction will “propel Brazil to become one of the top five countries for the wholesale division and a significant driver of growth for the group in the region.” Additionally, the acquisition of Tecnol will allow Luxottica to materially increase service levels to its Brazilian customers and will allow them to source product locally minimizing many of the costs and complexities currently faced by importing the company's brands into Brazil. Tecnol’s business model fits perfectly into Luxottica’s strategy of increasing its presence in the optical business, which is expected to grow globally over the next few years, and will be a springboard for its other activities in Latin America, the company said.

“We are delighted and very satisfied to start our collaboration with Luxottica in Brazil,” added Sergio Carnielli, chairman and founder of Grupo Tecnol. “We recognized Luxottica as the leading company in our business and we do believe that this operation will drive future success of both groups.”

Luxottica Group currently owns more than 7,000 optical and sun retail stores, including LensCrafters, Pearle Vision and ILORI in North America, OPSM and Laubman & Pank in Asia-Pacific, LensCrafters in China, GMO in Latin America and Sunglass Hut worldwide. The Group's products are designed and manufactured at its six manufacturing plants in Italy, two wholly-owned plants in the People’s Republic of China and one plant in the U.S. devoted to the production of sports eyewear.