Luxottica Group to Acquire Oakley for $2.1 Billion

Luxottica Group to Acquire Oakley for $2.1 Billion
SportsOneSource Media Posted: 6/21/2007
Luxottica Group S.p.A. and Oakley, Inc. have entered into a definitive merger agreement with the unanimous approval of both companies' Boards of Directors. Under the agreement, Luxottica Group will acquire all of the outstanding shares of Oakley for a cash purchase price of $29.30 per share, together with the purchase of all outstanding options and other equity rights at the same price per share less the exercise price. The total purchase price will be approximately $2.1 billion, representing an approximate premium of 18% over the most recent 30-day average NYSE trading price of Oakley shares and approximately 24% over the most recent three-month average trading price.

Oakley's Board of Directors will recommend the offer to Oakley's shareholders for approval.

Deal Highlights:

Oakley is an innovative and iconic brand: a leading global sports, technology and lifestyle company with a unique design point of view
Oakley has tremendous growth potential across numerous market segments
Luxottica provides a global platform to showcase the Oakley brands while enhancing its international distribution capabilities
This merger combines two strong, complementary business models
This merger establishes a stronger and more diversified portfolio of owned and licensed brands
Combined companies' retail platform includes luxury, fashion, lifestyle and sports concepts
Leonardo Del Vecchio, Luxottica Group Chairman, stated, "This is a milestone for our group. Significant changes in market dynamics require industry leaders to perfect a mix of best-in-class products and marketing with technical and operational capabilities. Luxottica has long admired the Oakley business and corporate culture, inspired by founder Jim Jannard. Oakley and Luxottica share a mutual commitment to quality, innovation, and technical skills -- qualities which will help us to solidify Oakley's brand position and Luxottica's strong leadership in the market. I look forward to welcoming the talented Oakley management team, led by Scott Olivet and Colin Baden, to our group."

Jim Jannard, Oakley, Inc. Founder, Chairman and Chief Mad Scientist, commented, "Mr. Del Vecchio and I started in the industry at about the same time and took our companies on different paths. We were both relentless in our desire to create great products and build unique organizations and I have always had tremendous respect for Mr. Del Vecchio as a partner and competitor. I am very excited that we have found a way to join forces. Oakley's technology and performance is one of the world's best kept secrets and this partnership should empower our ability to tell our story throughout the world. I am encouraged by the fact that Luxottica's management has come to understand the unique, rogue nature of Oakley in the eyewear industry and is committed to preserving it. Oakley will continue to be Oakley but with much greater resources and a platform for realizing the true potential of our brand and company. Given the opportunities in front of us, I wrote Mr. Del Vecchio this morning indicating my intent to make an investment in the company after the transaction closes."

Transaction Benefits:

Ability to leverage Oakley heritage and capability in sports, technology, and optics
Opportunity to create new eyewear categories and serve new customer needs
Increase level of service and innovation for wholesale customers
More dynamic, global company with enhanced career opportunities for employees
Enhanced economies of scale with respect to sourcing and distribution
Approximately EUR 100 million per year in operating synergies expected within three years
Luxottica will fund the payment of the purchase price and transaction costs from operating cash flow, available line of credit, and credit facilities to be available at the closing. Luxottica expects its pro forma Net Debt/EBITDA ratio for end of 2007, after giving effect to the transaction, to be approximately 2.3x(1).

The transaction is expected to close in the second half of 2007. This acquisition is subject to the approval of Oakley's shareholders and the satisfaction of other customary conditions, including various governmental approvals.