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Oakley, the listed California-based eyewear manufacturer, was eyed by Nike as a potential acquisition target, said an industry banker and industry executive.
According to recent reports, it also has been speculated that listed Italy-based sunglass retailer Luxottica Group could make a major acquisition, with Oakley cited as a possible target as well. Spokespersons with both Luxottica and Nike declined to comment on whether Oakley is viewed as a potential takeover candidate.
Lance Allegra, director of investor relations for Oakley, said his company does not comment on takeover speculation, though he said he had heard some of the same takeover buzz involving Luxottica and Nike.
Regarding the Nike talk, the industry banker said listed Oregon-based footwear giant Nike considered Oakley to be a “good fit,” but passed on making a bid because the price was too expensive at the time.
The industry executive said Nike eyed Oakley when Oakley’s current CEO Scott Olivet was VP of business development at Nike.
Nike passed on a deal, but subsequently, Olivet was hired by Oakley in late 2005, the industry executive said.
Although Nike passed on Oakley, Oakley was not resistant to Nike’s courting, and was interested in being acquired by the footwear business, the executive said.
Ties to Luxottica run deep for Oakley.
Nearly a year ago, Oakley signed a three-year contract to continue working with Luxottica, establishing sales to Luxottica through 2008. Luxottica accounts for about 5% to 6% of Oakley’s total annual sales of USD 761.8m in 2006, according to Allegra.
”Our relationship with Luxottica is very healthy and symbiotic,” Allegra said.
Oakley’s ties with Nike also are important.
Olivet, 45, was Nike vice president overseeing business development and key brands from 2001 to 2005. He developed Nike’s branding strategy for Cole Haan, Converse, Hurley, Starter, and Bauer-Nike Hockey.
Earlier this year, Nike’s discount footwear unit, Exeter Brands Group, unveiled its new Tailwind brand of athletic sneakers for women. The brand was designed exclusively for Payless ShoeSource stores, which is significant insofar as Olivet sits as a board member on Payless, said Allegra, who does not consider Nike as a rival.
The Payless partnership has some built-in advantages over Exeter’s previously announced relationship two years ago with Wal-Mart Stores. Payless CEO Matthew Rubel previously headed Nike’s Cole Haan subsidiary, while Payless board member Olivet was previously the Nike executive who oversaw all of its subsidiaries.
Oakley traded as little as around USD 10 per share in mid-2004 and as high as up towards USD 20 per share, or in the high teens, in mid-2005. It last traded above USD 25 per share as of 11 June, and had a market cap above USD 1.7bn.
With additional reporting by Mintoi Chessa-Florea in London
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