Ray-Ban Manufacturer Sues GrandVision as Sunglasses Battle Begins

Ray-Ban manufacturer EssilorLuxottica is considering suing buyout target GrandVision after the Dutch eyewear retailer breached the terms of its proposed $8.6 billion takeover agreement, a source told Reuters.

EssilorLuxottica, the French-Italian eyewear giant, announced its bid on GrandVision in July 2019, with the goal of controlling more than 7,000 outlets of the Dutch eyewear group worldwide.

The deal has since been at the center of a legal battle between the two sides, with EssilorLuxottica arguing that decisions made by GrandVision during the COVID-19 pandemic could give reasons to terminate its proposed acquisition.

An arbitration court ruled On Monday that GrandVision had breached the obligations of the acquisition agreement, which means EssilorLuxottica is no longer bound by the agreement.

“The arbitrage outcome confirmed what EssilorLuxottica had said that the GrandVision management was involved in a scheme that broke not only the spirit, but also the material terms of the contract governing the €7 billion deal,” the source added.

"Luxottica is expected to take legal action against GrandVision and its management, and to seek damages consistent with the scale and significance of the deal it undermined," the source pointed out.

The arbitration court ruled that GrandVision had violated the agreements by suspending payments to store owners and suppliers and by applying for state aid during the pandemic, without seeking approval from the Ray-Ban maker.

A second source said EssilorLuxottica had obtained all necessary regulatory approvals for the planned acquisition and had started the process of selling some optics stores in Italy, the Netherlands and Belgium to meet European antitrust requirements.

Ray-Ban is an Italian-American brand of luxury sunglasses and eyeglasses created in 1936 by the American company Bausch & Lomb. The brand is known for its Wayfarer and Aviator lines of sunglasses. In 1999, Bausch & Lomb sold the brand to the Italian eyewear conglomerate, Luxottica Group, for a reported US $640 million.

In 2020, the global revenues of Luxottica amounted to approximately €7.7 billion. Founded in 1961 in Agordo, Italy, the Luxottica Group is the world's largest eyewear company. Its best known brands include Ray-Ban, Persol and Oakley, Inc. The company also makes sunglasses and frames for a multitude of designer brands such as Chanel and Prada.