Billabong close to sale for heavily reduced 60c a share

Billabong is close to being sold to a private equity buyer headed by the surfwear retailer’s US chief, Paul Naude, for a price of 60c a share.

Industry sources told SmartCompany a deal could be announced this week and the offer has fallen from an initial $1.10 a share to 60c a share.

Naude and Sycamore Partners are continuing a period of exclusive negotiations with Billabong and its advisers Goldman Sachs.

Billabong had been entertaining interest from both Sycamore Partners and US group VF Corp, which owns the Wrangler and Vans labels, and its private equity partner Altamont Capital.

Pricing has tumbled during the due diligence and the price offers now value Billabong at $287 million, a significant drop from the once great surfwear company’s peak market capitalisation of almost $4 billion in 2007.

David Gordon, partner at retail advisory firm Bentleys, told SmartCompany an alternative for Billabong would be to work out a plan to segment the sale and then sell the high value components separately.

“I suppose the only way for shareholders to extract some sort of value is to value the parts and not the whole; there are some parts that as part of the whole reduce the value proposition,” he says.

Gordon also suggests Sycamore Partners and VF Corp could potentially divide Billabong.

“They could divide it between the two with one taking some and the other taking some – nobody knows exactly what each of the individual parties really wants,” he says.

 

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