Billabong receives competing takeover bid from unnamed firm
Thursday, September 6, 2012/
Troubled surfwear group Billabong has become the target of a second takeover deal in just six weeks, after it confirmed to the market this morning that a new bidder has expressed interest in the company.
The announcement comes after the $684 million TPG bid in July, but also after the group announced a terrible full-year result last week. A full year loss of $276 million was recorded amid a huge restructuring plan to be led by new chief executive Launa Inman.
Earlier this year it also announced it would shut 82 stores due to lower sales, specifically in Europe.
This latest announcement means Billabong has now received three private equity bids in just six months – two from the same bidder.
“The board of Billabong today announces that, following the close of trade on Wednesday, 5 September 2012, it received an indicative, non-binding and conditional proposal from another party interest[ed] in acquiring all the shares in the company,” it announced this morning.
The bid values the company at $1.45 per share, which matches the TPG proposal. Billabong is currently trading at $1.27.
Billabong did not name the company involved.
But just as it warned with regard to the TPG proposal, Billabong said it doesn’t believe the bid reflects its current value – even though its market cap sits at $650 million.
“The board of Billabong reiterates there is no guarantee that, following this process, a transaction will be agreed or that the board will recommend any proposal.”
“The board of Billabong now considers that the interests of shareholders will be best served by a formal process to thoroughly evaluate whether a change of control offer, at a price and on terms that the board would recommend, can be secured.”
Shareholders are likely to welcome the bid as it will increase their chances of a deal being completed. Especially after the company dismissed a bid by TPG earlier this year – a move which it later admitted was an oversight.
Reports indicate Bain Capital, the private equity firm founded by American presidential candidate Mitt Romney, could be among the suitors.
It’s been a busy and disappointing year for Billabong.
Shares have plummeted 22% since the beginning of the year, and by 60% in the past 12 months. Apart from delivering a poor financial result, it was criticised earlier this year for overlooking TPG’s bid.
Inman was brought in recently to oversee the company’s restructure, which includes a plan to cut retail range by 15%.