The French eyewear company Essilor (Euronext Paris: EI-FR) and the Italian eyewear Luxottica (Milan Stock Exchange: LUX-IT) announced Monday a 46 billion euros($49 billion) merger deal and the merger willcreate a "clear leader in the optical industry," UBS said in a note.

With a "strong brand portfolio, global distribution capabilities and complementary expertise in ophthalmic lenses, prescription frames and sunglasses," UBS estimated that EssilorLuxottica is set to become market leader. "Preliminary calculations show that, if merged, the new group would have made 15 billion euros in sales and reported earnings before interest, tax, depreciation and amortization of 3.5 billion euros in 2015."

"The new company should benefit from a robust balance sheet and strong cash-flow generation, giving it the financial flexibility to invest in its future growth both externally and internally," UBS said.

In terms of geographical distribution, about 50 percent of the sales should happen in North America, followed by about 20 percent in Europe and 16 percent in Asia. Hubert Sagniers, current chief executive officer of Essilor, said the merger should be completed in three to four years after closing of deal.

However, the merger deal could foster sentiment of anti-French takeovers after recent deals with French firms, such as Italcementi. Once the merger is finalized, EssilorLuxottica will be listed in the French index, meaning that the Italian bourse will lose its fourth most valuable stock, Dow Jones reported.

Following the merger news, both firms traded at the top of the European index. Essilor was up by more than 12 percent and Luxottica was up by more than 7 percent at 11.30 am London time.

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