Luxottica Group S.p.A., the Italian optical company that owns Oakley sunglasses and Sunglass Hut, has agreed to acquire 100 percent of Grupo Tecnol Ltda, a leading Brazilian eyewear company.
The deal aims to propel Brazil from the tenth largest country for Luxottica's Wholesale Division to its fifth largest market. Utilizing Tecnol's excellent, vertically integrated platform will allow Luxottica to increase service levels to customers and its presence in the Brazilian market. Tecnol has a highly efficient production plant, a portfolio comprising both house and licensed brands, strong wholesale distribution activities, an optical retail chain of 90 stores and a central, leading-edge, laboratory.
“This operation perfectly fits into our long-term growth strategy,” commented Andrea Guerra, Chief Executive Officer of Luxottica. “Brazil is one of the countries where Luxottica aims at being as “domestic” as it is in Italy, where it was established 50 years ago, 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.”
Brazil, and more generally Latin America, represents a key region for Luxottica's future development. Currently, Brazil is one of the top ten countries for Luxottica's Wholesale Division, notwithstanding its focus to date solely on the “luxury” segment, with an average price per unit higher than in Europe. 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. It is expected that the benefits realized from 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.
With a population of approximately 200 million people, Brazil is in fact one of the most dynamic and fast-growing countries in the world with strong GDP growth rates and a strengthening of its middle class. It is for these reasons that Luxottica selected Brazil, a country where the Group was able to enjoy double-digit growth rates over the last years, as one of the countries where it would significantly invest for future growth along with China, India, Mexico and Turkey.
The acquisition of Tecnol will allow Luxottica to materially increase service levels to its Brazilian customers, bringing them the same standards of excellence offered in countries like Italy, France and the United States. This transaction will allow Luxottica to source product locally minimizing many of the costs and complexities currently faced by Luxottica in importing the company's brands into Brazil. This will result in an ability to reduce the time required to deliver products to customers by two thirds and create other synergies for this business.
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. Tecnol provides an ideal platform for enhancing Luxottica's optical business and, more generally, will be a springboard for its other activities in Latin America.
“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.”
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 Euros, with a Compound Average Growth Rate over the last three years of approximately 14 percent.
Tecnol's Campinas plant is highly efficient and, with 90 percent of production dedicated to the optical business, it fits perfectly in Luxottica's global operational footprint.
Tecnol's brand portfolio complements Luxottica's and includes both house brands – including Platini, Jean Monnier and Tecnol – and licensed brands for the Brazilian market. Tecnol's wholesale distribution activities cover approximately 15,000 doors in Brazil through a network of distributors and representatives.
Grupo Tecnol also has a leading-edge central laboratory, which is able to efficiently deliver frames and lenses, and a retail optical chain of 90 stores in the state of San Paolo under the name Oticas Iris.
The acquisition is expected to close by the beginning of 2012. 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 4 years — 5 precent per year — at pre-determined prices. The enterprise value of Tecnol is approximately 110 million Euros.
