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.
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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%.