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French luxury group Kering (OTCPK:PPRUF) and French-Italian eyewear maker EssilorLuxottica (OTCPK:ESLOF) are among potential suitors to acquire Italian eyewear maker Marcolin, The Financial Times reported Saturday.
The manufacturer of the Tom Ford eyewear line had initial discussions with the duo and its rival Safilo (OTCPK:SAFLF), the FT said, citing people familiar with the matter. US-based Marchon is also said to have indicated interest in the acquisition.
However, the €1.3 billion ($1.4 billion) valuation sought by its private equity owners, PAI Partners, has become a point of debate, even as Kering (OTCPK:PPRUY), EssilorLuxottica (OTCPK: ESLOY), Safilo (OTCPK:SAFLF ) and Marchon have considered Marcolin as an additional asset.
However, Kering (OTCPK:PPRUF), EssilorLuxottica (OTCPK:ESLOF), or Safilo (OTCPK:SAFLF) have not indicated a willingness to “overspend” on Marcolin, the people said through its licensing deal with Estée Lauder ( EL) for the Tom Ford brand makes it an attractive target, according to bankers and analysts.
However, a valuation above €1 billion is not justifiable for a company with complex industrial processes, which could lead to integration problems.
The deal is also likely to attract considerable regulatory scrutiny, as all of the suitors are large players in the eyewear market. According to the people, EssilorLuxottica (OTCPK:ESLOF), the world’s largest eyewear maker, will be the best fit for Marcolin.
Marchon, being a smaller player than others, and Safilo (SAFIF), given its recent financial strains, are considered the least likely suitors.
PAI, Marcolin, Kering (OTCPK:PPRUF), EssilorLuxottica (OTCPK:ESLOY) and Safilo (OTCPK:SAFLY) did not comment on the talks. Marchon did not immediately respond to a request for comment.