Rayban sun optics

Rayban Sun Optics’ shares were hit by the news of its parent setting up a wholly-owned subsidiary in the same business. Luxottica Group of Italy owns 44.1% in Rayban. The company was asked by the Supreme Court, in January 2007, to make an open offer to Rayban’s minority shareholders.

It had earmarked e11 million to acquire 20% in the company, at a share price of Rs 104.3 a plus interest of Rs 79.95. The current market price is Rs 86, down from a high of Rs 100 it touched in February 2007.

Luxottica is planning to distribute (wholesale) luxury and fashion brands in the eyewear industry, including spectacle frames and sunglasses. Rayban will have a 5-year exclusive distribution license for the RayBan brand. The move stunts Rayban’s growth prospects as the luxury market in India has taken off.

Though Luxottica is giving Rayban a 5-year exclusive distribution license for products sold under the Rayban trademark, what happens after that is not clear. No wonder then, that investors are heading for the exit.