Sunglass giant AAi.FosterGrant of Smithfield reached an agreement to acquire
Magnivision Inc., the market leader in over-the-counter reading glasses, on
July 30.
The privately held company is purchasing Magnivision Inc. from American Greetings Corp., based in Cleveland.
Financial details of the all-cash transaction, carried out through an affiliate of AAi.FosterGrant, were not disclosed because of a confidentiality agreement, AAi.FosterGrant Chairman, President and CEO John Ranelli said. The transaction is expected to close by the end of the third quarter.
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The acquisition of Magnivision – which has 40 percent of the reading glasses market share – will likely strengthen AAi.FosterGrant’s name and brand recognition throughout the country, Canada, Mexico and the United Kingdom, where AAi.FosterGrant’s eyewear is sold, Ranelli said.
“Retailers appreciate brands – brands have a higher selling price – so we will be able to increase sales for retailers by becoming even more recognizable,” Ranelli said.
AAi.FosterGrant, which owns the second-largest portfolios of brands in the eyewear industry, is also entering the prescription frame market. The company recently reached agreements with Wal-Mart and Sears Canada to sell prescription frames and is looking at contracting with other major retailers.
“We have about 30 percent of the sunglass business and 25 percent of our sales are already in the reading glasses business,” Ranelli said. “Now that we are entering the prescription frames market, we will be the three markets of eyewear and the market leader in two of those markets.”
AAi.FosterGrant does not plan to merge any operations or downsize staff and customers will not notice any changes, Ranelli said.
Ranelli said there are no immediate plans for future acquisitions.
“Our view is that our job is to consolidate through acquisitions and build our company internally. We acquire only when there is a great opportunity,” Ranelli said. “It is so rare that a No. 1 business like Magnivision comes up for sale that there was a nearly unanimous board vote to put in a bid.”
Magnivision Inc., based in Miramar, Fla., is the world’s largest manufacturer and distributor of nonprescription reading glasses sold over the counter. American Greetings reportedly sold the company to focus on its greeting cards business.
U.S. sales of reading glasses grew 19 percent from 1998 to 2003, to nearly $400 million, Jobson Optical Research and the Sunglasses Association of America reports.
The upward trend is expected to continue as the U.S. population above 40 years old increases from 126 million in 2003 to approximately 140 million in 2010, U.S. Census Bureau information shows.
AAi.FosterGrant’s eyewear brands include FosterGrant, Gargoyles, Anarchy and Angel.
The company markets eyewear under licensed brands Body Glove, Club Med, Champion, Ironman and NASCAR’s Jeff Gordon.
The company was prepared for expansion after it completed a three-phase improvement plan in June 2002.
The company eliminated unprofitable businesses to focus on eyewear, concentrated on enhancing customer credibility by increasing sell-through and on-time deliveries, and improved its balance sheet by arranging a $52 million debt-for-equity swap and a $4 million equity investment to accelerate the growth of the FosterGrant brand.
