MILAN (Reuters) - Italy's Safilo SFLG.MI has agreed to buy 70% of Blenders Eyewear, looking to boost digital sales through a deal it said valued the U.S. surf and ski sunglasses brand at $90 million.
Founded in San Diego in 2012 by surf instructor Chase Fisher, who will remain as chief executive and 30% shareholder, Blenders generates 95% of its turnover online and only recently opened its first bricks-and-mortar store in San Diego.
E-commerce currently accounts for only 3% of Safilo’s total revenue, mostly from its existing U.S. brand Smith.
“With the deal we intend to accelerate Safilo’s digital growth by learning from the great capabilities of the founder of this native-digital brand,” Safilo Chief Executive Angelo Trocchia told Reuters on Monday.
The deal is expected to close in January, boosting group earnings from next year, the CEO added.
Blenders’ sales are expected to reach $42 million this year, up about 40% from 2018, and Mediobanca Securities analysts estimated the acquisition would add 4% to Safilo’s revenue.
Shares in Safilo closed 2% up ahead of a new business plan on Tuesday.
Safilo has been struggling to lift sales and profit after moves by luxury groups including Kering PRTP.PA and LVMH LVMH.PA to end licensing accords for brands such as Gucci and Dior, taking production in-house.
Monday’s deal strengthens Safilo’s brand portfolio, which is less exposed to the risks of the licensing business, as it contends with increasingly stiff competition.
Domestic rival Luxottica last year closed a merger with the world's biggest lens manufacturer, Essilor, to create eyewear giant EssilorLuxottica ESLX.PA.
Dior owner LVMH has established a joint venture with Marcolin, another domestic competitor, to design and manufacture eyewear for its Celine brand, formerly licensed to Safilo.
Kering, meanwhile, set up its own eyewear business to better control distribution and pocket rich profit margins and turned the Gucci license with Safilo into a production deal.
“It’s an interesting growth initiative, but in our opinion the main theme for the group is to manage the restructuring of its Italian manufacturing capacity (after the loss of the LVMH licenses),” broker Equita wrote in a note.
The acquisition will be financed through available cash and credit facilities, including a 30 million euro ($33.1 million)loan from Safilo’s top investor, Dutch investment fund HAL Holding.
That loan was described by Trocchia as “a concrete sign of engagement from the main shareholder”.
Editing by David Goodman
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