MILAN, June 21 (Reuters) - Italian luxury eyewear group Luxottica
The leading eyewear maker, whose brands include RayBan and Prada, is to buy the U.S. company in an all-cash deal worth about $2.1 billion.
The deal lets Luxottica expand into sports and activewear glasses. The combined company will have 6,000 stores across Asia, Europe and North America, according to a company presentation on the deal.
Luxottica had sales of 4.68 billion euros in 2006. The 2007 revenue projection includes a forecast for Luxottica net sales of 5 billion euros.
"We are combining two strengths, we are combining two leaders," Chief Executive Andrea Guerra told a conference call.
"We are not looking to have one pure Luxottica, but we are getting wider, we are getting more diversity, more power, more energy to the business."
News of the deal -- announced overnight -- sent shares of both companies up. Luxottica hit a record high of 28.48 euros.
The Italian firm is to buy all the outstanding shares of Oakley for $29.30 each.
Luxottica, which has a presence in Asia, will provide Oakley with new business opportunities, such as the 2008 Olympic Games in Beijing, Oakley Chief Executive Scott Olivet said.
"We would have a difficult time, with no infrastructure and no resources, taking full advantage of that opportunity," he said.
Luxottica is aiming for a 2007 core profit, after the deal, of 1.2 billion euros, and targets a net debt-to-EBITDA ratio of 2.3 times. It expects net debt to be between 2.7 billion and 2.8 billion euros, depending on exchange rates.
It expects the deal -- which is seen closing in the second half of the year -- to lead to operating synergies of about 100 million euros over the next three years.
Guerra said he did not expect any regulatory hurdles.
Luxottica Chairman and founder Leonardo Del Vecchio owns almost 70 percent of the company.
Oakley, based in Foothill Ranch, California, has been scaling back its apparel and footwear lines while beefing up its optics portfolio. This year it bought Eyewear Safety Systems, a company that supplies protective eyewear to the military, law enforcement and firefighters.
Last year, it bought luxury brand Oliver Peoples and retail chain The Optical Shop of Aspen, while launching a women's optical line.
Olivet said Oakley would not pay out a dividend this year. (Additional reporting by Rachel Sanderson)