Luxottica makes eyes at Latin America: EUR95 million deal

The Italian luxury eyewear  Luxottica Group SpA, has  announced it has entered into an agreement to acquire Multiopticas Internacional for approximately EUR95 Million. The acquisition means the first step to take over Latin America.

"Latin America represents a formidable driving force for both Luxottica Divisions. We expect to grow significantly in this key region, continuing on a trend of sustained development. Today's operation enables us to establish a meaningful position in retail in this region with an established network and a well-defined growth plan; on the other hand, it provides us with an opportunity to strengthen the positioning of our brands and Luxottica's business overall across the region" commented Luxottica Chief Executive Officer, Andrea Guerra. Multiopticas entails more than 470 stores throughout South America retails fashion, luxury, sports and prescription eyewear through retail brands such as Econopticas, Opticas GMO and Sun Planet.

The company generated net sales of more than €80 million in 2010 and that could rise to €95 million this year, said Luxottica, which posted €5.8 billion of net sales last year.  Over the last four years, Compound Annual Growth Rate (CAGR) of net sales was more than 11%. Under the terms of the agreement, Luxottica will pay 70% of the exercise price, determined on the basis of Multiopticas Internacional's sales and EBITDA values, at the time of the exercise of the call option; the remaining 30% will be paid by the end of 2011. The remaining 3% will remain with minority shareholders.

According to financial press, Luxottica said it will pay about €95 million ($134.5 million) to buy 57% of Multiopticas, which has more than 470 stores selling prescription and fashion sunglasses in Chile, Peru, Ecuador and Colombia. It already owns 40% of the company. The Italian company bought that stake in Multiopticas two years ago and had an option to buy the rest from 2012 to 2014. Luxottica is accelerating the purchase as it sees a good opportunity to speed up its investments plans in the region.

Nearly 50% of Multiopticas stores are in Chile, the wealthiest country in the region, and another third are in Peru. Earlier this month it opened its first Sunglass Hut in Brazil, where it hopes to have 15 flagship stores by the end of the year. In February, Luxottica bought two retail chains in Mexico with a total of around 70 stores, reported the Wall Street Journal.  The total account of its stores goes up as follows: 221 in Chile, 141 in Peru, 40 in Ecuador and 77 in Colombia.