Essilor acquires Transitions Optical, a global leader in photochromic lenses

  Essilor acquires Transitions Optical, a global leader in photochromic lenses

Business Wire

CHARENTON-LE-PONT, France -- July 29, 2013

Regulatory News:

Essilor International (Paris:EI) announces the signature of an agreement to
acquire the 51% stake in Transitions Optical owned by PPG. Transitions Optical
is a leading provider of photochromic lenses to optical manufacturers
worldwide. Following the transaction, Essilor will own 100% of the capital of
Transitions Optical. The transaction also includes the acquisition of
Intercast, a leading supplier of sun lenses.

The acquisition is fully aligned with Essilor’sgrowth strategy, which is
based on strong innovation in every segment of the optical industry, on visual
protection as well as on expansion in the mid-market and in fast-growing
countries. It also supports Essilor’s mission of bringing improved vision to
more than 4.2 billion people, of whom 2.5 billion do not currently benefit
from eye correction.

Founded in the United States 23 years ago and based in Pinellas Park, Florida,
Transitions Optical is the inventor of variable-tint plastic lenses. Its
business has been developed jointly by Essilor and PPG’s teams. Through
innovative capability in photochromics, Transitions Optical designs and
produces a wide range of variable-tint lenses that are sold through the
networks of its customers, ophthalmic lens manufacturers. The majority of its
products are distributed under the Transitions^® brand, one of the best-known
global optical brands alongside Varilux^® and Crizal^®. Transitions Optical
generated revenue of $814 million in 2012, of which around $310 million with
lens manufacturers other than Essilor.

Under the agreement, Essilor will also acquire 100% of the capital of
Intercast, a high-performance sun lens manufacturer based in Parma, Italy. In
2012, Intercast revenue stood at nearly $34 million.

Commenting on the transaction, Hubert Sagnières, Essilor’s Chairman and Chief
Executive Officer, said: “This agreement marks the start of a new phase of
growth for Transitions Optical, which Essilor and PPG have turned into a
leader in photochromic lens products. The acquisition of Transitions Optical
is fully aligned with Essilor’s strategy. It's a company we know well, so the
integration process should be smooth. It will enable us to boost expansion in
the photochromic segment, which is growing twice as fast as the optical
industry, notably in Asia, Latin America and Europe. The Transitions^® brand
which, like Varilux^® and Crizal^® , ^  is a frontline eyecare brand, will
continue to be available to all lens manufacturers worldwide.

The acquisition of Intercast will add to Essilor’s positioning in the sun lens
segment, which enjoys significant growth potential.

All in all, the integration of Transitions Optical and Intercast into our
portfolio of businesses will lead to a significant improvement in the group’s
profitability and create value for our shareholders and consumers.”

PPG will remain a key partner for Transitions Optical, as a supplier of dyes
as well as long-term research and development services.

The consideration for the transaction amounts to $1.73 billion at closing, as
well as a deferred payment of $125 million dollars over five years, for 51 %
of the capital of Transitions Optical and 100 % of Intercast.

Based on current estimates, the transaction should have a positive impact on
Essilor’s financial indicators:

- A rise in the consolidated contribution margin to 19.5% from year two of the
integration;
- An accretive impact on earnings per share as of year one of the integration,
and of at least 5% per annum in subsequent years;
- A positive impact of 50 bps on like-for-like growth in consolidated revenue
as of year three of the integration.

Following the transaction, which will be entirely funded from Essilor’s cash
resources and medium term financing, the consolidated debt-to-equity ratio
will remain below 40%.

Subject to various regulatory approvals, the transaction is expected to close
during the first half of 2014.

A conference call will be held today at 10:00 a.m. CEST
The number to dial is +33 (0)1 76 77 22 27 or +44 (0)20 3427 0503 (Access
code: 1432154)
The slides of the presentation will be available live by clicking on the
following link:
http://hosting.3sens.com/Essilor/20130729-15EF053C/en/

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
corporate mission is to enable everyone around the world to access lenses that
meet his or her unique vision requirements. To support this mission, the
Company allocates more than €150 million to research and innovation every
year, in a commitment to continuously bring new, more effective products to
market. Essilor’s flagship brands are Varilux^®, Crizal^®, Definity^®,
Xperio^®, Optifog^TM and Foster Grant^®. It also develops and markets
equipment, instruments and services for eyecare professionals.

Essilor reported consolidated revenue of approximately €5 billion in 2012 and
employs around 50,700 people. It operates in some 100 countries with 22
plants, more than 400 prescription laboratories and edging facilities, as well
as several research and development centers around the world.

For more information, please visit www.essilor.com.

The Essilor share trades on the NYSE 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.

Contact:

Investor Relations and Financial Communication
Véronique Gillet – Sébastien Leroy – Ariel Bauer
Tel.: +33 (0)1 49 77 42 16
or
Corporate Communication and Press
Maïlis Thiercelin
Tel.: +33 (0)1 49 77 45 02
 
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