Nikon Jumps 21% on EssilorLuxottica Interest in Stake Boost

Nikon cameras for sale.

(Bloomberg) -- Nikon Corp.’s shares surged 21% after Bloomberg reported that EssilorLuxottica SA, the maker of Ray-Ban sunglasses, is exploring a potential deal to increase its stake in the Japanese optical equipment manufacturer.

The Franco-Italian company is considering a move to boost its Nikon stake to around 20%, people familiar with the matter said. They asked not to be identified because the information is private. It currently has a nearly 9% holding in Nikon, according to data compiled by Bloomberg.

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Tokyo-traded shares of Nikon rose by the most ever on Wednesday. As of Tuesday’s close, its stock price had fallen 11% this year, giving the company a market value of $3.3 billion. EssilorLuxottica has been in discussions with the Japanese government over its plans, due to the sensitive nature of some Nikon technology, the people said. Nikon management is also aware of the proposal, they added.

Nikon has optical knowhow that’s key for imprinting circuitry on semiconductors as well as for creating photographic images. It competes with larger rival ASML Holding NV in lithography equipment and supplies chipmakers including Intel Corp. and Taiwan Semiconductor Manufacturing Co., according to data compiled by Bloomberg.

Deliberations are ongoing and there’s no certainty they will lead to a transaction, the people said. Representatives for EssilorLuxottica and Nikon declined to comment. A spokesperson for the Japanese finance ministry didn’t immediately respond to a request for comment.

There’s been a surge in dealmaking in Japan by companies and private equity funds amid a push to improve governance and shareholder returns. That’s sparked attempts like Canadian Circle K store operator Alimentation Couche-Tard Inc.’s failed bid for Seven & i Holdings Co. Meanwhile, Taiwan’s Yageo Corp. is seeking to take over precision thermistor maker Shibaura Electronics Co., which is also weighing an offer from Nintendo Co. supplier Minebea Mitsumi Inc.

JV Partners

Nikon has been operating an eyewear joint venture with EssilorLuxottica since 2000. EssilorLuxottica began accumulating the Japanese firm’s shares from as early as August last year and disclosed a 5.1% stake in October.

Earlier this month, Nikon slashed its full-year outlook by almost half, citing a slowdown in its imaging and health-care businesses. In lithography, Nikon has fallen behind ASML, the world’s only supplier of extreme ultraviolet machines used to make the most cutting-edge chips. That’s while Nikon is locked in battle with domestic rival Canon Inc. in the field of price-competitive legacy chips.

Story Continues

Nikon is seeking to streamline and focus on its lithography operations alongside high-end cinematic filmmaking. Lithography advances in particular require high upfront costs due to the nanoscale precision required. ASML’s EUV machinery required decades of investment and collaboration with Intel, Samsung Electronics Co. and TSMC.

EssilorLuxottica, the world’s biggest eyewear maker, has been pressing ahead with its smart-glasses initiative. Sales of Ray-Ban Meta smart glasses more than tripled in the first six months of this year. It has also introduced its hearing-enhanced Nuance Audio line and announced Oakley Meta, which adds sportswear to its collaboration with Facebook parent Meta Platforms Inc.

In its half-year earnings report, EssilorLuxottica described Nikon as “one of the top contributors in lenses, winning across its entire range covering single vision, progressive and DOT myopia control.”

--With assistance from Mayumi Negishi, Takashi Umekawa, Yuki Furukawa, Debby Wu and Vlad Savov.

(Updates with Wednesday’s market reaction.)

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