New Look Vision Group Inc., Canada’s biggest eyewear retailer, wants to go private under new ownership to speed up its expansion into the United States while further consolidating its home market.
The Montreal-based optical retailer unveiled a proposal late Thursday to sell itself to a trio of investors led by U.S. private equity company FFL Partners for $50 a share in a deal valued at $800-million, not including debt. Pension giant Caisse de dépôt et placement du Québec and the Dr. H. Doug Barnes Family are the other two members of the buyers’ group.
New Look plans to delist from the Toronto Stock Exchange if the transaction is approved in order to better execute its growth strategy. The new investors have committed to fund a major push by the company into the U.S. while it continues to grow in Canada, New Look chief executive officer Antoine Amiel said.
“To take the company to another level, we had to do something,” Mr. Amiel said in an interview Friday. “We needed to free ourselves from the shackles of being public and from the current shareholder group.”
Mr. Amiel, who joined New Look in 2012 from Japanese lens maker Nikon Corp., has transformed the company from a sleepy regional player into Canada’s biggest optical chain through acquisitions and same-store sales growth. The thinly traded stock has roughly quadrupled in value since his arrival. It surged further Friday to $49.62, just under the proposed takeout price.
New Look chairman W. John Bennett, a former investment banker with what is now Scotia Capital, controls the company with a roughly 35-per-cent stake. He is cashing out and stands to receive gross proceeds worth about $250-million while rolling over a small portion of his shares.
Mr. Amiel is rolling over most of his roughly 1-per-cent stake, a condition of the deal with the buyers, the CEO said. Other New Look directors and certain executive officers holding shares totalling about 4 per cent of its ownership capital are also backing the deal.
New Look has been seeking options for months to bolster its financial position for the strategic push and the retailer’s financial advisers solicited offers through a formal process. The FFL-led offer was the highest one received, the company said.
The all-cash payment offers an immediate way for New Look investors to obtain liquidity for their shares, the retailer said. New Look is consistently among the Quebec companies with the lowest volume of daily trading volumes. The offer represents a 26-per-cent premium to the stock’s closing price at end of day Thursday.
New Look operates about 406 stores. Its main brands are New Look Eyewear, Vogue Optical, Greiche & Scaff, Iris and Florida-based Edward Beiner, which it took over last year as a first toehold in the U.S. It also makes prescription lenses at a factory in Montreal.
Operating as a public company had several key drawbacks, including a “mild reluctance” shown in the past by public investors to fund expansions by Canadian retailers into the U.S. market, Mr. Amiel said. It also led to what he called “an asymmetric playing field” between New Look and its privately held rivals.
“They got to take a good peak” into New Look’s company records, Mr. Amiel said. “They ended up knowing a lot more about us than we know about them.”
Canada’s demographics are favourable for eyewear providers like New Look in the years ahead. The vast majority of people require vision correction as they age and younger generations are getting prescriptions in larger numbers as the effect of increased screen time in recent years begins to be felt.
San Francisco-based FFL was founded in 1997 to invest in middle-market companies where FFL’s strategic and operating expertise can help “accelerate growth and build better businesses,” according to its website. It has more than $4.5-billion under management, with a special focus on business services and health care companies.
Among FFL’s current investments is Eyemart Express, a major optical retail chain located in the United States and known for its one-hour service. Eyemart Express was founded by Dr. Barnes, who is also part of the New Look transaction.
The transaction isn’t subject to any financing conditions. It must receive the approval of at least two-thirds of the votes cast by shareholders at a special meeting to be held by May 18.
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