Oakley has been takenover… by the mothercompany that also fabricates brands such as Ray-Ban.
Luxottica in Oakley takeover
Jonathan Birchall, New York and Emily Backus, Milan
June 23, 2007
ITALIAN fashion eyewear group Luxottica is to buy its US sports-performance rival Oakley in a $US2.1 billion ($2.5 billion) deal that will give it global dominance of the market for sunglasses, spectacle frames and goggles.
The deal combines Luxottica brands Prada, Versace and Dolce & Gabbana with the Californian maker of the sports sunglasses popularised by Tour de France winners Greg LeMond and Lance Armstrong.
Luxottica chief executive Andrea Guerra said Oakley’s complementary business represented an opportunity to combine two strengths, with Oakley’s existing management team remaining in place.
« This is not one of those acquisitions by Luxottica where we are restructuring from A to Z the company we buy, » he said.
The merger would increase the distribution of Oakley’s products through Luxottica’s larger global retail network and its global sourcing network, and strengthen Luxottica’s positioning in performance and sports categories, stressing the attraction of Oakley’s Oliver Peoples luxury fashion eyewear unit, which it acquired last year.
Luxottica owns more than 5600 eyewear retail stores in North America, Europe, the Asia-Pacific and China and had worldwide sales of $US4.7 billion in 2006.
Its stores include US chains Sunglass Hut and Lens Crafters.
Oakley, which had annual sales of $US762 million last year, owns a small retail network and an apparel and footwear business.
Deutsche Bank analyst Francesca di Pasquantinio said the deal made a lot of sense from a strategic and financial point of view, saying sports eyewear had been under-represented in Luxottica’s broad portfolio of fashion eyewear brands which included Ray-Ban and the Polo Ralph Lauren licences.
Despite their cultural differences, both companies are run by chief executives who took over from their entrepreneurial founders in the past few years. Oakley founder Jim Jannard stepped down as chief executive in 2005 in favour of Scott Olivet, a year after Leonardo Del Vecchio handed over to Mr Guerra.
Mr Jannard holds more than 60 per cent of Oakley’s shares.
Mr Olivet said the two companies’ cultures were very different and they did things in different ways but they had made progress already in working together.
Luxottica will pay $US29.30 a share, representing a 24 per cent premium over the three-month average trading price of Oakley shares.
Both companies expect that within three years they will benefit from E100 million ($158 million) a year in operating synergies.
Luxottica’s ADR’s rose 8.6 per cent in New York to $US37.85, while Oakley rose 12.6 per cent to $US28.40.
Luxottica received investment advice from Rothschild and legal advice from Winston & Strawn.
Oakley was advised by Goldman Sachs and Skadden, Arps, Slate, Meagher & Flom.