Oakley sold to Luxottica for $2 billion

Bloomberg, reported in Dealbreaker's Opening Bell

June 21 (Bloomberg) -- Luxottica Group SpA, the world's biggest maker of eyeglasses, agreed to buy Oakley Inc. for $2.03 billion to add sports sunglasses to the Italian company's Ray-Ban and Ralph Lauren brands.
Shares of both companies surged. Foothill Ranch, California- based Oakley's investors will receive $29.30 a share, 16 percent above yesterday's closing price, according to a statement.
The U.S. company, whose shades are endorsed by cyclist Lance Armstrong and golfer Annika Sorenstam, will lower Milan-based Luxottica's annual costs by 100 million euros ($134 million) by 2010. The bid follows PPR SA's offer for Puma AG this year as premium sports brands command higher prices. Oakley's newest Nanowire styles sell for $300.
``Nobody can touch Luxottica now,'' said Gianluca Pacini, an analyst with Caboto Equity Research in Milan, who has a ``buy'' rating on the shares. ``If you calculate the synergies they expect to exploit, the acquisition adds value. It's the industry's No. 1 player, with the sports brands, luxury brands and optical retailers.''

Luxottica has pretty much mastered the vertical integration game, by owning both the manufacturing side and their own bevy of retail optical stores across several banners, plus having their wares available for sale at fine specialty retailers pretty much everywhere.

There is, it seems, no stopping them.

Did I mention that retail margins on optical apparel are absolutely huge? Discounting and price slashing don't rule the roost in the sunglasses business; it's all about upselling, appealing to the customer's emotional needs, and the add-on sale.

Sphere: Related Content