US-based specialised chemicals firm PPG Industries has agreed to sell its 51% stake in Transitions Optical to France-based Essilor International for $1.73bn.
Essilor International is an ophthalmic optics company that holds 49% stake in Transitions Optical, a photochromic lens maker and a consolidated subsidiary of PPG.
PPG intends to use the proceeds from the sale of its stake on core business acquisitions and share repurchases.
PPG chairman and CEO Charles E Bunch said: "The optical industry is changing rapidly, including the emergence of new technologies.
"The completion of this transaction will position Transitions as a core business within a leading global optical industry company."
Following the completion of the deal, PPG will remain a key supplier of materials to the optical industry, including to Essilor.
Essilor will also sign multi-year agreements with PPG for the continuation of supply of optical dyes and research and development services and acquisition of PPG’s optical sunlens unit.
The earnings benefits from this transaction are expected to offset PPG’s reduced earnings due to the sale of its stake in Transitions Optical.
This transaction carries an enterprise value of about $3.4bn, and PPG will receive a cash of $1.73bn pre-tax or approximately $1.5bn after-tax.
"We suspended share repurchase activity at the outset of the second quarter due to ongoing negotiations, and are now reinitiating repurchases targeting a range of $500m to $750m for the year," Bunch added.
The deal is expected to close in the first half of 2014, following regulatory approvals.
In fiscal 2012, Transitions Optical posted net sales of around $800m.