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Billabong rejects TPG takeover proposal

by Laura Board  |  Published February 27, 2012 at 9:18 AM
Billabong-rejects-TPG-takeover-proposal.jpgAustralian board sports clothing and equipment maker Billabong International Ltd. on Monday, Feb. 27, rejected a A$766 million ($820 million) takeover proposal from TPG Capital but said it remained in talks with the investor.

Billabong, of Burleigh Heads, Queensland, said its board determined that the A$3 per share price "does not reflect the fundamental value of the company." It added that founder and 14.8% shareholder Gordon Merchant also felt "the price is significantly below the underlying value of the company."

The board "has, together with its advisers, had a number of discussions with TPG to give it the opportunity to increase its proposed price to better reflect the value of the company," it said. "Those discussions are ongoing. It is not known at this stage whether those discussions will result in an improved proposal from TPG."

Billabong's shares closed Monday up A$0.14 at A$3.05 in Sydney.

TPG of Fort Worth had a week ago resubmitted the indicative proposal after removing an earlier precondition that would have precluded Billabong's Feb. 17 sale of just under half of surfing and snowboarding accessories maker Nixon Inc. to Trilantic Capital Management LLC.

TPG's proposal remained conditional on financing, subject to due diligence and on Billabong not selling any more of its brands, which include Element, Von Zipper, Honolua Surf Co. and Tigerlily.

Led by CEO Derek O'Neill, the company is closing up to 150 of its 677 stores and implementing other cost-cutting measures after the appreciation of the Australian dollar and weak trading in Europe and Australia hurt sales and profits, hammering its shares.

For the six months ended Dec. 31, revenue rose 1.5%, to A$847.2 million, and Ebitda declined almost 22%, to A$74.1 million.

As of Dec. 31, net debt was A$525.6 million, an increase of 37% after Billabong had to make a deferred payment for its 2006 purchase of Nixon.

Billabong derived A$400.8 million of first-half revenue from the Americas. Revenue in that region rose 5.1% on the year.

Billabong is taking advice from Goldman, Sachs & Co. and law firm Allens Arthur Robinson.
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Tags: Allens Arthur Robinson | Billabong International Ltd. | Derek O'Neill | Element | Goldman Sachs & Co. | Gordon Merchant | Honolua Surf Co. | Nixon Inc. | Tigerlily | TPG Capital | Trilantic Capital Management LLC | Von Zipper

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