BY SEAN HONG
MILAN, Italy--Oakley, the Southern California eyewear maker that American pro cyclists Greg LeMond and Andy Hampsten helped popularize during the 80s, will merge with former rival Luxottica Group later this year.
The Italian eyewear house has offered $2.1 billion to acquire Oakley, and the deal has already received blessings from the boards of directors of both companies.
“This is a marriage of two great families,” said Steve Blick, who handles sports marketing for Oakley’s bike business. “It’s their distribution and our technology.”
Luxottica is the world’s top manufacturer and distributor of prescription frames and sunglasses in the premium and luxury segments. The Italian company, which owns Arnette, Ray-Ban and Revo, gains a predominant share in the sports optics market with the acquisition of Oakley.
The company also holds licenses on such high-end brands as Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada and Versace. Altogether, Luxottica Group’s portfolio currently has eight house brands and 17 licensed brands.
The group, which has nearly 5,800 eyewear retail stores worldwide, manages leading retail brands such as LensCrafters and Pearle Vision in North America, OPSM and Laubman & Pank in Asia-Pacific and Sunglass Hut globally.
Luxottica’s products are designed and manufactured in six plants in Italy and in two wholly-owned plants in China. Its wholesale distribution network covers 130 countries.
Oakley has a long history in the sport of cycling, and is often credited with making eyewear a standard part of a cyclist’s gear. LeMond was wearing a Factory Pilot model when he crossed the finish line at the 1986 Tour de France.
“They were the first sunglass company to make a product that looked like racing sunglasses. It didn’t look like just another pair of sunglasses. It looked truly different,” said Felix Magowan, chief executive officer of VeloNews.
Mark Graff, co-founder of SmartEtailing, said Oakley’s optical technologies helped revolutionize the sport of cycling.
“Try going out and riding in regular sunglasses sometime, and it reminds you of what a wonderful thing it is to have cycling-specific eyewear,” Graff said.
In 2001, the two companies engaged in a legal battle when Oakley sued Luxottica and affiliate brands for patent infringement. The suit was settled in 2003.
In an email Oakley chief executive officer Scott Olivet sent to Oakley employees worldwide, Olivet explained the reasons for Oakley’s merger after coming off such a strong year. Oakley reported record sales of $762 million in 2006.
“We believe that if every retail associate in every store explained to the consumer how superior our product is, more people would choose Oakley. Think about how much easier that will be with direct access to the associates in Luxottica’s nearly 5,800 retail locations around the world. This is just one example how the partnership can help make us even better,” the email read.
Olivet said in the email that Luxottica’s ability to forecast trends in the women’s business, expertise in prescription eyewear, and early development of the Chinese market also factored into the decision to join forces.
The deal is expected to boost Oakley’s resources and global distribution capabilities, but preserve its established design aesthetic. Oakley’s apparel, footwear and accessories business will continue without interruption, and Oakley’s headquarters will remain in Foothill Ranch, California.
“Luxottica understands that a big part of what differentiates us from everyone else is our culture,” Olivet said.
Pending approval from Oakley’s shareholders, Luxottica will cover the purchase price and transaction costs from operating cash flow, available line of credit and credit facilities to be available at the closing.