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EssilorLuxottica Chairs Jostle for Control

A feud at the head of EssilorLuxottica has escalated with the French and Italian groups jostling for control, despite the originally intended equal distribution of power.

In a recent interview with the French publication Le Figaro, Leonardo Del Vecchio, the founder of Luxottica who is now the largest shareholder and executive chairman, said Hubert Sagnieres, the executive vice chairman, would only listen to himself.

a certain number of his actions reflect a de facto attempt to take control of the new Group, without any premium offered to shareholders

“Hubert Sagnieres only accepts what he himself has proposed, he refuses a proposal from anyone else, we’ve had to accept everything he does,” Mr Del Vecchio told the paper.

“As soon as the first general assembly of the new group on Nov. 29, he behaved as if Essilor had bought Luxottica. He broke the (merger) pact signed in 2017,” he said.

Mr Del Vecchio also said the 400 million-600 million euros in cost savings the merger was expected to yield has fallen behind schedule. They are now expected to be delivered over five years instead of the originally proposed three year period.

The search for a new CEO is also said to have created significant tension between the chairman and Vice chairman.

Mr Sagnières’ office responded to the article published in Le Figaro stating, “Delfin and its representatives published on Wednesday serious and false accusations regarding the Group’s governance and management, accusations to which the Board of Directors had already responded, especially regarding the respect of the initial agreements.

“This approach, which is contrary to the company’s social interest, is detrimental to the company and to all its shareholders.

“It creates a shock for its employees and its management, while many joint working groups are demonstrating on the daily basis the considerable potential of the two companies’ combination.

“The evolution of EssilorLuxottica’s future governance has been a subject discussed by the Board of Directors for several months, with Hubert Sagnières focusing on:
• Ensuring compliance with the merger agreements and a governance in line with that of a large international public company;
• Launching the search of a new CEO for EssilorLuxottica (interview in the Financial Times on 10/12/2017), aiming for an appointment as soon as possible, in accordance with international best practices.

“On November 5, 2018, even before the first Annual General Meeting of the combined Group was held, Mr. Leonardo Del Vecchio announced that he wanted to unilaterally delegate his role as CEO of EssilorLuxottica to Mr. Francesco Milleri. He has since then indicated that he would like to change the balance of powers established in the combination agreements. Despite his denials, a certain number of his actions reflect a de facto attempt to take control of the new Group, without any premium offered to shareholders.”

Analysts have predicted the tensions could undermine the integration process of the group, whose stock has fallen over 5% since the start of the year, despite a broader rising market.