Oakley's acquisition suits Luxottica

This morning, the world's largest eyewear maker, Luxottica Group SpA (NYSE: LUX), announced it would acquire U.S. sunglasses maker Oakley Inc (NYSE: OO) in an all-cash deal for around $2.1 billion, or $29.30 per share.

In what could be a "win-win situation for both companies," in the words of analysts at Morgan Keegan, Luxottica said the combination could offer an opportunity to create new eyewear categories and "enhanced economies of scale." Indeed, an Oakley acquisition should complement Luxottica, which owns the RayBan, Chanel, Prada and Versace lines, and help it transition into the sporting goods sector. Conversely, Oakley, which has been cutting back on its other lines that include footwear and apparel to focus more on its eyewear offerings, should fit Luxottica like a glove.

UBS analyst Laura Leonardelli believes an acquisition of Oakley would increase Lux's sales by around 12% in 2008. Additionally, it would allow Luxottica to further solidify its presence in the U.S. and other markets.

After the announcement, shares of Oakley were up 12% and Luxottica traded around 8% higher, signalling that investors agreed this was a good deal for all involved. The deal has been approved by both company boards and is expected to be finalized in the second half of 2007.