Essilor International SA agreed to buy full control of its Transitions Optical venture from PPG Industries Inc. for $1.73 billion to strengthen its tinted- products line in the French lensmaker’s biggest deal ever.

The purchase of PPG’s 51 percent stake in the partnership will add to earnings the first year that Transitions Optical is integrated, Essilor, based in the Paris suburb of Charenton-le- Pont, said today in a statement.

Transitions Optical makes polarizing lenses that adapt to changing light and block harmful solar rays. The segment is expanding at twice the rate of the optical industry, said Essilor, the world’s biggest maker of eyeglass lenses. The Pinellas Park, Florida-based venture had 2012 sales of $814 million. The takeover also includes Intercast, a supplier of sun lenses based in Parma, Italy, Essilor said.

“Essilor has now the sole leadership in the photochromic market, which is highly profitable and is enjoying higher growth rates than other segments of the global optical market,” Cedric Rossi, an analyst at Bryan Garnier & Co. in Paris, wrote in a note to clients today.

Shares Rise

Essilor rose as much as 6.5 percent to 85.85 euros, the biggest intraday jump since Feb. 28, and was trading up 6 percent at 2:09 p.m. in Paris. The stock has jumped 12 percent this year, valuing the manufacturer at 18.4 billion euros ($24.4 billion).

The transaction will help Essilor’s earnings per share by “a minimum” of 5 percent annually as of the second year of integration, and “should push the organic sales of Essilor by half a point, but maybe more, starting in year three,” Chief Executive Officer Hubert Sagnieres said on a conference call with analysts today. Demand is “strong” in the photochromic industry, he said.

The purchase will be entirely funded from Essilor’s cash resources and medium-term financing, the French company said.

The deal gives Transitions Optical a $3.4 billion enterprise value, Pittsburgh-based PPG said in a separate statement. The U.S. paintmaker will continue to supply dyes to the business, it said. The transaction should be completed by the first half of 2014, PPG and Essilor said.

PPG plans to use proceeds from the sale for acquisitions and share repurchases, it said. The company, which suspended stock buybacks at the start of the second quarter because of the negotiations with Essilor, will restart the transactions, with a targeted range of $500 million to $750 million for the year, PPG said.

“We are pleased with the enterprise value of the transaction, which reflects a valuation multiple midway between PPG’s and Essilor’s multiples, benefiting both parties,” PPG Chief Executive Officer Charles Bunch said in the statement.

The disposal ends 23 years of PPG’s involvement in Transitions. The business is better off being part of a focused optical company, given the rapidly changing nature of the industry, Bunch said.

Essilor will invest in Transitions Optical and will continue looking for “bolt-on deals” to accelerate growth worldwide, the French company said today. The manufacturer expects “significant” cost savings and revenue boosts from buying Transitions, Sagnieres said, without elaborating.

“Our familiarity with Transitions makes us confident in our ability to extract those synergies and makes this really, for shareholders, a low-risk investment,” he said. “It’s a company we know well, so the integration process should be smooth.”

Jones Day LP is representing Essilor on the transaction, with Rothschild Group as a financial adviser. PPG’s counsel is Wachtell Lipton Rosen & Katz and Hogan Lovells, with Goldman Sachs Group Inc. on the financial side.

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