Luxottica with Essilor is muddied by the group’s structure

Getting new spectacles can be an expensive and lengthy process. The same applies to the formation of EssilorLuxottica, a merger of lens crafting and designer frame businesses. It presented its maiden results yesterday.Whatever the long-term benefits of this deal, investors will watch nervously before the benefits hove into view. The merger brought together founder Leonardo Del Vecchio’s Luxottica, known for its Ray-Ban and Oakley sunglasses, with his counterpart HubertSagnières’s lens maker Essilor. While the former is executive chairman and the latter is executive vice-chairman, the titles mislead: powers are equally shared. The lack of any overarching control could prevent the recognition of a promised €600 million inannual cost savings. Although the group consolidated its shares into a single listing last September, results were presented for two distinct companies… The numbers met expectations… Yet the share price dropped 6 per cent… On paper, the investment case for a merger makes sense. The combined group should have significant pricing power, accounting for a quarter of global eyewear sales… The shares, nevertheless, have fallen over a fifth since the two listings consolidated last year. Any clear path to prosperity is muddied by the group’s structure. Investors should focus their attention elsewhere.