Number-one global eyewear maker Luxottica Group said it will buy U.S. sunglass maker Oakley for $29.30/share ($2.1 billion), a 16% premium to its Wednesday close. Luxottica says it expects to save $134 million over the next three years. Athletes favor Oakley sunglasses, saying they can be worn in direct sunlight and punishing physical conditions without eye strain. CEO Leonardo Del Vecchio said, "Significant changes in market dynamics require industry leaders to perfect a mix of best-in-class products and marketing with technical and operational capabilities." The purchase compliments Luxottica's Ray-Ban, Chanel, Polo Ralph Lauren and Versace lines, among others. The company also said Oakley's Bright Eyes and Sunglass Icon stores will compliment its LensCrafters and Pearle Vision North American retail chains. Caboto Equity Research's Gianluca Pacini said, "Nobody can touch Luxottica now... It's the industry's No. 1 player, with the sports brands, luxury brands and optical retailers." European research firm Cheuvreux raised its price target on Luxottica from €27 to €29.50. The companies expect to complete the transaction in H2 2007. In options trading Wednesday, 1637 Oakley Aug. $25 calls changed hands, rising $0.85 to $2.15 -- six times their average daily volume. In pre-market trading, Luxottica shares are up 8.6%, and Oakley shares are up 14%.
Sources: Press release, Reuters, Dow Jones, Bloomberg
Commentary: Summer Sale -- Don't Forget Your Sunglasses • OptiBoard discussion pre-acquisition
Stocks/ETFs to watch: Oakley Inc. (OO), Luxottica Group S.p.A. (NYSE:LUX)
Related: Oakley Inc. history
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