In a surprising move, $2.6 billion eye care benefits provider VSP on Monday acquired Marchon Eyewear Inc. for $735 million in cash and debt.
Under the terms of the agreement, Marchon, whose revenues exceeded $525 million last year, will become a wholly owned subsidiary of the Rancho Cordova, Calif.-based VSP. The company delivers full-service eye care benefits to 55 million members in the U.S. and Canada and dispenses eyewear technologies and services to private practice eye doctors. The firm also provides low-income, uninsured children with free eye care.
Al Berg, Marchon’s president and chief executive officer, and Larry Roth, executive vice president, along with the eyewear manufacturer’s global team, will continue in their current roles. Marchon will continue to operate from its Melville, N.Y., headquarters as an independent entity within the VSP organization.
“We were looking for the right strategic move and this deal has been about a year in the making,” Berg told WWD. “Our industry has gone through a number of changes in the last 10 years, and while we are successful global players, we have bigger competitors and felt we needed a long-term strategy to position Marchon for the next 100 years. We’re growing globally but a lot more is needed to invest in growth — whether it’s acquisition or expansion of factories we already own or the expansion of sales offices around the world. We now have the resources to increase our business sizably and go head-to-head with the two biggest players [Luxottica and Safilo Groups] in the industry.”
Marchon produces eyewear and sunwear for such brands as Calvin Klein, Coach, Emilio Pucci and Michael Kors. Additionally, the company manufactures its own collections of eyewear under the Airlock and Flexon brands. The company was founded in 1983 by Berg, Roth and Jeff White, who died in 2005.
According to Berg, the acquisition will equip VSP’s 25,000 independent optometrists with Marchon’s eyewear collections for their retail divisions as well as the firm’s branding and sales tools. As part of the transaction, VSP will acquire Marchon’s 50 percent ownership interest in Eye Designs, which provides custom interior design and merchandising systems for the optical industry.
“Today, it’s very hard for optometrists to be successful on both the medical and business side,” Berg said. “Our experience is on the commercial side — in training, marketing, merchandising and in designing and building offices. We can help take doctors’ businesses to the commercial side and provide an environment of successful business.”
Doctors under the VSP umbrella will in turn encourage patients to purchase Marchon frames, but will not sell Marchon exclusively. The firm is not currently planning to open its own optical stores, but sunwear outlets will be considered in the next few years.
Marchon’s move into the managed care arena follows Luxottica’s lead. The Milan-based company, which owns Lenscrafters and Pearle Vision, offers a full range of its licensed collections at those facilities. According to Berg, Marchon is trying to build its new business model on targeting both the managed care and retail customer equally.
“[Luxottica’s] goal is to sell their own product in their own stores,” Berg said. “So from our perspective, our job is to help convince optometrists to dispense more of our product and show their patients why they should carry more Marchon product.”
Berg said each of Marchon’s licensed brands were enthusiastic over the news and that the deal has not affected department store accounts, which will likely carry more fashion-oriented frames than their optical counterparts.
“We met with all of our licensors,” Berg said, adding their enthusiasm for the deal was universal. “They need strong licensees in our industry. They are happy with Marchon but they also believe that the stronger Marchon is, the better it is for them. They understand the competitive landscape of this industry.”
Exclusive: @britneyspears is continuing to expand her brand. The pop icon, who appears in @kenzo ’s latest campaign, is partnering with Epic Rights to launch a line of branded merchandise. Read @hernameislex ‘s story, link in bio. #wwdnews #britneyspears
The Duchess of Cambridge channeled Princess Diana’s look upon giving birth to Prince Harry, when she and the Duke of Cambridge departed the hospital with the new baby Prince this afternoon in London. #wwdeye #princeofcambridge
The new Prince of Cambridge has arrived! The Duke and Duchess of Cambridge posed with the 8-pound newborn. She wore a look from one of her go-to designers, @jennypackham. Tap link in bio for more. #wwdeye #princeofcambridge
Jewelry label @alisonlou has made a name for itself with fine jewelry that speaks to the Millennial market. Now @twallz21 reports that the label is bringing those playful ideas to a new affordable line of lucite hoops with the launch of Loucite by Alison Lou. Here’s a look from the line modeled by @emrata. #wwdaccessories
@sarahjessicaparker and @gilt are teaming up on a bridal ready-to-wear line. Tomorrow, Parker will launch SJP by Sarah Jessica Parker Bridal — and as part of the launch, Gilt will offer 15 exclusive styles from the SJP by Sarah Jessica Parker footwear collection that were designed to complement the new line. Made out of 10 styles, the line is designed for a variety of occasions, from bridal showers to receptions. Get more details on WWD.com #wwdfashion
A grooming moment between @tanfrance and @antoni last night at the The LGBT Community Center Trailblazer Awards honoring Anna Wintour, Ricky Martin and more. See more photos at WWD.com #wwdeye (📷: @lexieblacklock)
“It was a very surreal feeling. It wasn’t like we were in the studio together coming up with it — it’s more like he discovered it and loved it. I didn’t let myself get my hopes up, but then it happened it was very exciting,” said singer-songwriter @nombe on discovering that @pharrell would be using his song, “Cant Catch Me” on his HBO documentary series “Outpost.” The German-born singer — named Noah MacBeth — talked to WWD about feminism, using art as a platform for political expression and personal style. Read more on WWD.com #wwdeye (📷: @jilliansollazzo)
This season, denim is going west – in influence. Brands like @fathersdaughterla (pictured here), @tommyhilfiger Jeans, @levis and more are opting for raw, top-stitching styles. (Styled by @thealexbadia; 📷: @ryanplett)