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California and the West

Oakley Buys Luxury Eyewear Maker

February 09, 2006|Ronald D. White | Times Staff Writer

Oakley Inc., whose high-tech sunglasses are worn by world-class athletes in several sports, said Wednesday that it bought privately held Oliver Peoples Inc., whose classic spectacles have been seen on celebrities such as Brad Pitt and Angelina Jolie.

The acquisition -- valued at $46.7 million, excluding the assumption of debt and incentives -- is the first in the 35-year history of Foothill Ranch-based Oakley. Company executives said the deal with Oliver Peoples would enable Oakley to extend its reach while remaining true to its own branding.

"We are partnering with someone whose products are a little more premium, a little more fashionable and in a zone of the market that would not be appropriate for us to do with the Oakley brand," Chief Executive Scott Olivet said. "So we looked at who would be a great partner in that and we found them."

Analysts described the deal as a marriage of opposites that made sense on a number of levels. Oakley is known for cutting-edge technology and optics and its flashy advertisements, many featuring athletes such as seven-time Tour de France winner Lance Armstrong, skateboard champion Ryan Sheckler and snowboarding champion Laura Hadar. Last year Oakley introduced a line of eyewear equipped with Bluetooth cellular technology, which allows hands-free wireless communication.

By contrast, the Oliver Peoples name does not even appear on its eyewear. The company has depended on the word of mouth of celebrity owners such as Tom Cruise, Johnny Depp, Jessica Simpson and Gwen Stefani, and not on traditional advertising.

Larry Leight, chief executive, designer and co-founder of Oliver Peoples with his sister, Dore Chodorow, said the company's designs were inspired by the estate collection of Oliver Peoples, a 1920s-era optician, that Leight acquired for about $6,000. The company opened its first store on Sunset Boulevard in 1986; another of its five boutiques is at South Coast Plaza in Costa Mesa.

"I think it's a good strategy. They are acquiring a brand that appeals to an entirely different consumer, and they can make Oliver Peoples more successful down the road," said analyst Mitch J. Kummetz of brokerage firm D.A. Davidson & Co.

That was a primary reason for agreeing to the sale, said Leight, noting that his three brands go head-to-head with deep-pocketed competitors such as Dior, Gucci and Chanel.

"I can't achieve our vision and our dreams operating as a family business," Leight said of his 53-employee operation. "It was the right time to attract the right buyer."

Oakley said the deal had been completed with the approval of founder and Chairman Jim Jannard, who owns 64% of shares.

Under terms of the agreement, Oakley will assume about $5 million in Oliver Peoples debt. Oakley will pay an additional $4 million as an "earn-out incentive" for Oliver Peoples if it maintains its current performance.

Oakley announced the deal after markets closed. Its shares rose 32 cents to $16.24 in regular trading and were little changed after hours. The company is scheduled to announce fourth-quarter and full-year 2005 earnings today.

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