UPDATE 1-Essilor to buy Coastal Contacts for C$430 million

Thu Feb 27, 2014 11:06am EST

Feb 27 (Reuters) - Essilor International will buy Coastal Contacts Inc , an online retailer of eyeglasses and contact lenses, for C$430 million ($388.2 million), Coastal said on Thursday.

The French company will buy all of the issued and outstanding common shares of Coastal.com for C$12.45 per share, representing a premium of about 20 percent to Coastal stock's Wednesday close on the Toronto Stock Exchange.

The deal comes as traditional retail and consumer companies look to buy smaller e-commerce firms as a way to boost growth.

The eyeglass business is a $68.4 billion market globally, according to a research report from Wedbush analyst Shyam Patil, though online represents only around 3 percent of the pie.

Patil believes online penetration for the business could climb in the coming years to as much as 16 percent.

Earlier this year, Essilor also bought Costa Inc, a maker of premium sport sunglasses, for $270 million to tap into the growing prescription sun lens market.

The Coastal.com board has recommended that shareholders of Coastal.com vote in favour of the agreement, Coastal said in a statement.

Guggenheim Securities LLC served as lead financial adviser to Coastal.

The transaction is expected to close in the second quarter of 2014, Coastal said.

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