👉 Background: EssilorLuxotica is the merged company of Luxottica from Italy and Essilor from France, and pretty much owns all the big eyewear brands like Ray-Ban, Oakley, Persol as well as Sunglass Hut.

👉 What happened: EssilorLuxotica announced that it will acquire the streetwear brand Supreme from VF Brands for $1.5 billion USD. And this is a chunky discount on Supreme's previous acquisition of $2.1 billion USD in 2020.

👉 What else: This is EssilorLuxotica's first step in the apparel industry. It wants to acquire Supreme’s platform and data to connect to its Gen Z audience. But investors are unsure about the strategic fit of this deal, which has sent EssilorLuxotica's shares down nearly 4%.

What's the key learning?

💡A strategic fit is when an acquiring company can benefit from synergies with the acquired company.

💡EssilorLuxotica’s core business is eyewear, while Supreme specialises in luxury streetwear, scarcity, and connecting with young people. While those are separate markets, EssilorLuxotica is trying to leverage Supreme’s brand equity for itself.

💡It's hoping to bring together its own retail experience with Supreme's reputation to both grow the Supreme brand, and make its eyewear cool...again. A win-win for both...if EssilorLuxotica can successfully unlock those synergies.