Essilor to acquire Transitions Optical from PPG

PPG Industries Inc. and Essilor International have reached an agreement whereby PPG will divest its 51% interest in Transitions Optical to Essilor, which currently holds a 49% interest in the venture, according to a Transitions press release.

Essilor will also enter into multiyear agreements with PPG for continuing supply of optical dyes, research and development services and to acquire PPG’s optical sun lens business, the release said.

The transaction reflects an enterprise value of approximately $3.4 billion, with PPG receiving cash at closing of $1.73 billion pre-tax, approximately $1.5 billion after-tax, subject to certain post-closing working capital and net debt adjustments, according to the release.

The transaction is expected to close in the first half of 2014 and is subject to satisfaction of customary closing conditions, including receipt of regulatory approvals, the release said.

“We intend to redeploy the proceeds from the transaction in a timely manner on core business acquisitions and share repurchases," Charles E. Bunch, PPG chairman and CEO, said in a PPG press release. “The earnings benefits from this cash deployment are expected to more than offset the reduced earnings from the Transitions Optical divestment. Additionally, we suspended share repurchase activity at the outset of the second quarter due to ongoing negotiations and are now reinitiating repurchases targeting a range of $500 million to $750 million for the year.”

Transitions Optical President Dave Cole said the Transitions leadership team will continue to run the business.

“We will continue to focus on strengthening our mutually beneficial relationships with all of our valued customers across the optical industry; leveraging the talents of our passionate, talented people; and providing the highest quality photochromic lenses to consumers,” he said in the Transitions release.