Israel approves Luxottica´s acquisition of Erroca

The Italian eyewear company will be the first foreign company entering the Israeli accessories market after the national Antitrust Authority approved the acquisition of Erroca. Sources informed the Israeli business journal Globes that the Antitrust

Authority has just approved the acquisition of optician chain Erroca by Italian-based global chain Luxottica SpA (BIT; NYSE: LUX) for €20 million.

Its takeover by Luxottica is the first time that a foreign chain is entering the Israeli market. It will replace the Erroca brand with its own Sunglass Hut label.

Despite Israeli optician chains, including Optics Halperin Ltd., Opticana Ltd., and Super-Pharm Optics all oppose the deal, the Antitrust Authority approved the sale on January the 5th, after Erroca proposed amendments in the deal in response to wall-to-wall objections by the opticians sector. Luxottica now has to approve the amendments. Erroca owner Michael Wolf will meet Luxottica executives in Italy next week.

Erroca, founded in 1987, is Israel´s leading company specializing exclusively in sunglasess with 63 branches nationwide and 400 employees across the country.

"This acquisition is strategically important to Luxottica, as it allows us to establish a meaningful retail presence in Israel, a very dynamic and fast-growing market," said Luxottica EVP for Sun and Luxury Retail, Fabio d'Angelantonio, in the announcement., made in August, 2011. "Israel represents a very important market for Luxottica," added Paolo Alberti, Luxottica's executive vice president of wholesale.

International expansion is proving to pay off for Luxottica, as its shares currently have the 10th highest dividend yield in this segment of the market. Its current dividend yield is 2.23%. Its dividend payout ratio was 37.96% for the last 12 months.
 
In the last months, Luxottica has nailed important agreements with well established fashion labels, and expanded into Latin America thanks to a coveted deal to acquire the Brazilian Tecnol for EUR110 million.