Abstract
In June 2007, Luxottica announced its intention to perform a takeover of Oakley in a $2.2 billion deal. This case investigates the way to finance the acquisition, all debt versus all equity financing, and its effects in terms of value creation for shareholders. The note explains the capital structure used in the transaction, in particular we focus on: (1) the financial analysis pre and post acquisition; (2) the EPS trend, considering the two scenarios; (3) the cost of capital and the capital structure used; (4) the premium paid for synergies; and (5) the P/E pre and post takeover.