Italian glasses giant Luxottica has agreed an eye-watering £40 billion ($68b) merger deal with Essilor, the world's leading manufacturer of lenses, to create a global behemoth in the eyewear industry.

Luxottica, which owns the Ray-Ban and Oakley brands and was founded by Leonardo Del Vecchio, Italy's richest man, will join up with the French lens maker in one of Europe's biggest ever cross-border deals.

Del Vecchio, 81, will be the combined company's largest single shareholder with a stake between 31 and 38 per cent, although his voting rights will be capped at 31 per cent.

His Luxottica company has a market value of around £21b ($35b), with Essilor's at around £19b ($32b).

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"With this agreement my dream to create a major global player in the eyewear industry... comes finally true," said Del Vecchio.

"Finally... two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof."

The two companies will have a combined annual revenue of more than £13b ($22b), they said in a statement, adding that they will employ more than 140,000 employees with sales in more than 150 countries. The merger is expected to deliver cost savings ranging from £350 million ($593m) to £530m ($899m) "in the medium term".

An ageing population and increasing focus on eye care in Asia and Latin America is expected to ensure that the eyewear market, worth around £80b ($135b), continues to grow.

It is hoped that the merger, creating a company called EssilorLuxottica, will bring an end to a turbulent few years in the Luxottica boardroom, which has seen three chief executives leave the company in the last two years.

That came after Del Vecchio took on a more hands-on role after years spent away from the day-to-day running of the business, prompting criticism that he is unwilling to relinquish his control of the company.

He will serve as executive chairman and CEO of the merged group, with Essilor chairman and chief executive Hubert Sagnieres taking up the position as executive vice-chairman and deputy CEO, although they will have equal powers.

Sagnieres said: "By joining forces , these two international players can now accelerate their global expansion to the benefit of customers, employees and shareholders as well as the industry as a whole."

UBS analyst Nicolas Langlet commented: "By combining together Essilor and Luxottica, the new group would be a clear leader in the optical industry with a strong brand portfolio, global distribution capabilities and complementary expertise in ophthalmic lenses, prescription frames and sunglasses."