PPG Industries has reached an agreement to sell 51% interest in Transitions Optical to Essilor International for $1.73bn.

This deal has an enterprise value of approximately $3.4bn, of which PPG will receive cash of $1.73bn before tax or approximately $1.5bn after-tax for its stake.

Essilor currently holds a 49% stake in Transitions Optical, a global supplier of photochromic lenses and a consolidated subsidiary of PPG.

This transaction is expected to close in the first half of 2014 following regulatory approvals and customary closing conditions.

Essilor will also sign multi-year agreements with PPG for continuing supply of optical dyes and research and development services and purchase of PPG’s optical sunlens unit.

In 2012, Transitions Optical had net sales of approximately $800m.

PPG chairman and CEO Charles E Bunch said that Transitions has been an excellent growth catalyst for PPG for more than two decades.

"However, 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.

"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. Additionally, PPG will remain an important supplier of optical materials to the industry, including to Essilor," Bunch added.

The company intends to use the proceeds from this transaction on core business acquisitions and share repurchases.