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Australia's Rip Curl Group Pty Ltd. has appointed Bank of America Merrill Lynch to assess its options after it received several unsolicited approaches that could value the closely held surfing apparel maker at as much as A$576 million ($607 million).Rip Curl said Monday, Sept. 17, that it had received "unsolicited approaches from several international organizations which have indicated a desire to invest in our company."
The company is likely to consider bids in the region of 11 to 12 times its forecast fiscal 2013 Ebitda of A$48 million, valuing it at as much as A$576 million, according to a source with knowledge of the auction.
"Looking at comparative deals, Billabong agreed to sell its Nixon [Inc.] brand for 9.2 times Ebitda early this year, but that was only a 50% stake. Others, Timberland [Co.] and Volcom [Inc.], have been valued at 12 and 15 times," said the source, who asked not to be named. "An industry average of 11 to 12 times forward Ebitda seems to be about the norm."
Australia's iconic surf brands have suffered in recent years as younger buyers have abandoned beach-themed apparel in favor of so-called streetwear, and as Australian consumer spending has declined.
Rip Curl is the second Australian surf brand to be targeted by investors in recent months after local rival Billabong International Ltd. received competing proposals from TPG Capital and Bain Capital LLC, both of which are bidding about A$694.4 million. Both PE houses are in the process of conducting due diligence.
Billabong in February agreed to sell a 48.5% stake in Nixon to Trilantic Capital Partners for $285 million, valuing the unit at $464 million. France's PPR SA in May 2011 spent $697.5 million, or about 15 times Ebitda, on Costa Mesa, Calif.-based Volcom and VF Corp. bought Stratham N.H.-based Timberland Co. in June 2011 for $2 billion.
Rip Curl was founded in 1969, in the southern Australian coastal town of Bells Beach, by Doug "Claw" Warbrick and Brian "Sing Ding" Singer, who tapped a nascent demand for wet suits specifically designed for surfers. Its products are made in Australia and under license in nine other countries including the U.S., France and South Africa.
The Bank of America Merrill Lynch team working on the sale includes Sydney-based Kevin Skelton and Melbourne-based David Petrie.
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