(Bloomberg)—EssilorLuxottica, the newly merged Italian-French eyewear conglomerate, said it was the target of a 190 million euro ($213 million) fraud at a factory in Thailand as a power struggle roils its headquarters.
The world’s leading lens maker is working to recover the lost funds, and employees associated with the incident, which occurred at an Essilor plant, have been fired, according to a statement. EssilorLuxottica said it has begun an investigation and filed complaints in Thailand and other jurisdictions.
The scandal risks reigniting concern about the way the company is run as clashes at the top have preoccupied management since the 2017 merger of Essilor, a French maker of lenses, and Luxottica of Italy. Finances are still managed separately by the two entities with two different CFOs, and the case will likely elicit further pressure from investors for faster integration, according to Luca Solca, an analyst with Bernstein.
“This is one of the most egregious cases of financial malpractice in our sector,” Solca said in a note to investors. “The sooner this is tightly integrated under one roof, the better.”
The loss will be treated as an adjusted item in its 2019 results, EssilorLuxottica said in the statement.
The company’s market value is about 60 billion euros and revenue for the 12 months ending in September was more than 18 billion euros ($20.18 billion), according to data compiled by Bloomberg.
A company spokeswoman declined to identify the plant or say how many people were involved in the case. The company is collaborating with authorities, she said.
Simmering rivalries at EssilorLuxottica spilled into public view in March, with the two factions clashing over governance issues such as naming a chief executive officer. To break the stalemate, Chairman Leonardo Del Vecchio, the founder of Luxottica, and Vice Chairman Hubert Sagnieres, who comes from Essilor, in May agreed to transfer power to their respective deputies.
Dan Loeb’s Third Point hedge fund said in October that it had purchased a $700 million stake in EssilorLuxottica in early 2019, and that it planned to push the company to resolve its governance issues.
EssilorLuxottica is No. 104 in the 2019 Digital Commerce 360 Top 1000.
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