Essilor buys US eyewear group FGX in $465 mln deal

* Price $19.75 per FGX share

* FGX shares closed at $17.91 on Tuesday

* FGX shares rise 8.6 pct on Wednesday

* Deal to boost Essilor EPS from 2010

(Adds share price, background, analyst comment)

PARIS, Dec 16 - Essilor (ESSI.PA), the largest maker of corrective eye lenses, plans to buy U.S. group FGX International (FGXI.O) for about $465 million to expand in the growing market for non-prescription reading glasses.

The deal values FGX International at $19.75 a share and will boost Essilor's earnings per share from next year, the French company said on Wednesday. The price is 10 percent above FGX's closing share price on Tuesday.

FGX shares jumped 8.6 percent to 19.45 euros by 1444 GMT. Essilor stock was 0.8 percent higher at 41.19 euros.

Essilor is extending its distribution network in the United States towards the mid-range segment through this acquisition, Raymond James analysts said. FGX seems a good deal financially given the company's operating margin was above Essilor's in Q3.

Essilor has pledged to drive growth through acquisitions to take advantage of a strong balance sheet and the impact of the economic downturn on smaller rivals. It has forecast an overall revenue rise but no like-for-like growth for 2009.

YET ANOTHER ACQUISITION

The French company bought 17 companies in the first nine months of the year, representing additional full-year revenue of about 83 million euros, and is banking on the needs of ageing populations. It had net debt of 125 million euros on Sept. 30.

Essilor's annual revenue for 2008 was 3.07 billion euros ($4.47 billion), with net profit at 419 million euros, while FGX reported 2008 revenue of $256 million and net profit of $17 million.

Demand for non-prescription reading glasses is growing, chief executive designate Hubert Sagnieres said. In addition, the market fits well with our prescription lens business and is supported by favourable demographic trends.

FGX will benefit from our international distribution network while we will leverage FGX's brands and expertise to deploy this new offering around the world, he said.

Smithfield, Rhode Island-based FGX reported 2008 revenue of $256 million, generated mainly in the United States and Canada, and has approximately 375 staff. Its eyewear brands include Foster Grant, Magnivision and Angel.

Essilor plans to take on 100 million euros of FGX debt, giving the transaction an enterprise value of $565 million, equivalent to 8.4 times estimated 2010 earnings before interest, tax, depreciation and amortisation.

The deal will be financed through available cash and 1.7 billion euros of credit facilities, Essilor said, adding that the purchase would have a neutral impact on Essilor's operating margin.

It's a good acquisition in strategic terms, accretive in 2010 and 2011, one trader said.

Shareholders with about 33 percent of FGX's outstanding stock, including Berggruen Holdings North America and the company's senior management, have agreed to vote in favour of the transaction, expected to close in 2010, Essilor said.

The agreement includes a termination fee of approximately $18.3 million payable by FGX to Essilor in the event FGX accepts a superior unsolicited offer, FGX said in a statement.

Lazard Freres is advising FGX. (Editing by Simon Jessop and Jon Loades-Carter) ($1=.6864 Euro)