October 24, 2019 / 12:58 PM / 21 days ago

Third Point confirms EssilorLuxottica stake, still talking with Sony: letter

FILE PHOTO: Daniel S. Loeb, founder of Third Point LLC, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May 9, 2012. REUTERS/Steve Marcus/File Photo

BOSTON (Reuters) - Billionaire investor Daniel Loeb said on Thursday his hedge fund owns a $700 million stake in Ray-Ban maker EssilorLuxottica SA and is urging the company to “accelerate leadership transitions”.

Loeb also said he was still speaking with Sony and remained committed to creating value at the Japanese company even after management largely ignored his proposals for ways to streamline the company’s portfolio.

Loeb wrote a letter to investors seen by Reuters that he and Third Point executives had met with many EssilorLuxottica executives and expect the company to increase earnings and free cash flow at mid-teens CAGR (compound annual growth rate) for several years.

“Combined with the GrandVision acquisition, we expect EL to earn over 8 euros of EPS in 2023, nearly doubling the figure from 2019,” the letter said.

Loeb, whose firm oversees $14.5 billion and is widely watched for its activist investments, also said that he is disappointed with Sony’s decision to stick with the “status quo” after Third Point presented a list of ways to unlock value.

“While we did not expect that all our requests, such as the separation of the image sensor business, would be addressed immediately, we did expect that the Company would make some

recommendations to address the structural impediments to long-term value creation for Sony’s shareholders,” he wrote in the letter.

Still he says that he is committed to “constructive dialogue” with the company and said that discussions are ongoing. He calls Sony one of the “most undervalued large capitalization stocks in the world” and noted that it has contributed to the firm’s 12.7% return this year.

Reporting by Svea Herbst-Bayliss; editing by David Clarke and David Gregorio

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