Latest News Essilor to Acquire 50 Percent of Shamir Optical By Staff Friday, October 15, 2010 6:15 AM KIBBUTZ SHAMIR, Israel and CHARENTON-LE-PONT, France—Shamir Optical Industry Ltd. (Nasdaq: SHMR), Kibbutz Shamir and Essilor International (NYSE Euronext: EI) today announced that they have signed an agreement whereby Essilor will, through a series of transactions, acquire 50 percent of Shamir Optical. As a result of these transactions, Kibbutz Shamir and Essilor will each own 50 percent of Shamir Optical. The agreement comes after months of rumors of a pending deal between the two lens makers. Headquartered in Kibbutz Shamir, Israel, Shamir Optical is a leader in the fast growing freeform lens technology sector. The company reported 2009 revenues of $142 million, generated mainly in Europe and the U.S., and has approximately 1,400 full-time employees. Essilor, based in Charenton-le-Pont, is the leading ophthalmic lens manufacturer worldwide. Under the terms of the agreements between Essilor and Kibbutz Shamir, the existing management team of Shamir Optical will remain in place. The transaction, which is subject to regulatory approvals, rulings, the approval of Shamir Optical’s shareholders in accordance with Israeli law and the approval of the district court of Nazareth, Israel, is expected to close in mid 2011. Amos Netzer, chief executive officer of Shamir Optical commented, “This venture places Shamir Optical in a position to accelerate the development of new products and to strengthen its presence in the market place by using Essilor’s R&D capabilities, notably in coatings, and its worldwide distribution network. The transaction will create synergies and provide Shamir Optical with additional resources to invest in its development.” Hubert Sagnieres, Essilor’s chief executive officer said, “This joint venture represents a strategic addition to Essilor’s business and will strengthen our offer to the mid-tier segment with additional high-quality products. Shamir Optical’s range of products fits closely with Essilor’s. Thanks to our existing network, respective expertise and the potential for vertical cost synergies, our partnership will allow us to grow the worldwide optical business with innovative, new value-added products and services and to expand our offer to eyecare professionals around the world. Shamir Optical will continue to produce and promote its brands, products and services as a separate business entity.” Under the planned transaction, Shamir Optical will be delisted from the Nasdaq Global Market and the Tel Aviv Stock Exchange through a merger with a wholly owned subsidiary of Essilor by which all shareholders other than Kibbutz Shamir will receive cash for their shares. Essilor will simultaneously acquire for cash additional shares directly or indirectly from Kibbutz Shamir in order to reach 50 percent of Shamir Optical. The price offered for each transaction is $14.5 per Shamir Optical share. This price, together with the dividend of $0.804 payable to Shamir Optical shareholders of record on Nov. 8, 2010, represents a total value of $15.3 per share, corresponding to a 57 percent premium over the last 90 day average closing share price on Nasdaq of $9.75. The transaction will represent a cash investment of $130 million for Essilor, to be fully financed using Essilor’s existing committed credit facilities. Shamir Optical’s board of directors and its audit committee have unanimously approved the terms of the proposed transaction and Shamir Optical’s board of directors has recommended it to Shamir Optical shareholders. Certain shareholders representing approximately 69.3 percent of Shamir Optical’s outstanding capital, including Kibbutz Shamir, 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 Merger Agreement contains certain termination rights for both Essilor and Shamir Optical and further provides that, upon termination of the Merger Agreement under specified circumstances, Shamir Optical may be required to pay Essilor termination fees of $11 million. Shamir Optical expects to send its shareholders a shareholder information statement and proxy materials in connection with the meeting at which Shamir Optical's shareholders will be asked to approve the proposed merger. Essilor will fully consolidate Shamir Optical upon closing. Based on current estimates, the transaction is expected to be accretive to Essilor’s earnings per share as of 2011 (before impact of the purchase price allocation).