Third Point LLC, the U.S. hedge fund that pushed for modifications in businesses varying from Nestle SA (NESN.S) to Campbell Soup Co (CPB.N), accumulated a stake in Ray-Ban manufacturer EssilorLuxottica SA (ESLX.PA), individuals familiar with the issue said on Sunday.
Third Point, run by billionaire investor Daniel Loeb, aims at EssilorLuxottica in the midst of a power struggle within the world’s largest manufacturer of lenses and glasses, following its formation last year through a € 48 billion ($53 billion) fusion of Essilor from France and Luxottica from Italy.
Billed as a merger of equals, Luxottica’s founder Leonardo Del Vecchio and Essilor’s chief Hubert Sagnieres degenerated into a fight over power. The two sides announced a truce in May, but the company is still facing uncertainty as it seeks a CEO that can deliver on the €600 million annual savings promised by the merger.
Third Point encountered Del Vecchio, who is now the executive chairman of EssilorLuxottica and, according to two sources, owns about a third of the business. It was not possible to learn the details of the meeting and the precise stake of Third Point.
Third Point has a record of calling for operational changes in businesses where their inventory could be driven by a distinct approach, although it is not evident what position the New York-based hedge fund will take on how EssilorLuxottica should be run. Third Point is still in the process of purchasing stocks of EssilorLuxottica, one of the sources said.
The sources asked for anonymity because the EssilorLuxottica investment by Third Point is confidential. EssilorLuxottica, with € 57 billion in market capitalization, and Third Point declined to comment.
A Delfin representative, the holding company of Del Vecchio, also declined to comment.
Under an agreement that expires in 2021, the Essilor and Luxottica camps were supposed to have equal weighting in the leadership of the combined company.
Last November, tensions emerged when Del Vecchio appeared to tap his right-hand man and Francesco Milleri, Chief Executive of Luxottica as the next CEO.
In March, when Del Vecchio’s Delfin said it would seek arbitration in the International Chamber of Commerce, the conflict came to a head, prompting Essilor to request a Paris tribunal to nominate an external mediator.
Investors including Baillie Gifford, Comgest, Edmond de Rothschild Asset Management, Fidelity International, Guardcap, and Phitrust et Sycomore Asset Management asserted that a “major governance crisis” undermined corporate integration. Their efforts to install autonomous directors on the board of EssilorLuxottica failed in a shareholder vote.
The two parties agreed on ending their legal feud in May. Del Vecchio and Sagnieres made Milleri and Laurent Vacherot, the current CEO of EssilorLuxottica, jointly responsible for monitoring and defining the integration process.
They set a deadline by the end of 2020 to find a new CEO. Milleri and Vacherot agreed not to stand up for the position.
EssilorLuxottica said last month that it would acquire Dutch opticians group GrandVision NV (GVNV.AS) for up to € 7.2 billion in money in a sign that the two camps have set some of their disagreements aside.
GrandVision, whose chains include Vision Express in the UK and For Eyes in the US, would offer EssilorLuxottica control over more than 7,000 stores worldwide where it already sells products including Varilux lenses and Ray-Ban sunglasses. Other brands such as Oakley, Persol and Oliver Peoples are EssilorLuxottica.
Competition regulators are likely to face intense scrutiny of the agreement. Only after a lengthy research, the European Union endorsed the merger of Essilor and Luxottica.