Ailing Australian surfwear firm Billabong entered into exclusive takeover talks Tuesday with its former US head Paul Naude and private equity firm Sycamore Partners on a drastically reduced offer.
“Billabong today announces that it has entered into a 10-business-day period of exclusivity with the Sycamore consortium in relation to a non-binding proposal,” the Australian surf empire said.
The offer values Billabong at just 60 cents per share and follows a rival Aus$1.10-per-share takeover bid — worth Aus$580 million (US$556 million at current rates) — from clothing giant VF Corporation in January, which stalled.
Billabong shares have haemorrhaged since the VF Corp offer and last fetched 73 cents. It was placed in a trading halt last Tuesday pending an announcement on the latest round of talks.
The vulnerable company has been targeted by a number of suitors including private equity firm TPG, which withdrew a $1.45 per share offer in October.
That was followed by an initial offer from Naude and Sycamore in December of Aus$1.10-per-share, subject to due diligence.
Billabong reported a half-year net loss of $536.5 million in February, including $427.8 million in impairments to its brands and a $106.6 million writedown of its investment in youth label Nixon.
Excluding these significant items Billabong posted global sales revenue of $699.6 million — 8.1 percent lower than the previous corresponding period.
It expects full-year earnings of $74-$85 million, down from earlier forecasts of Aus$100 million-Aus$110 million, with conditions weakening, particularly in Europe.
Billabong said the 10-day exclusivity period would allow Sycamore to engage an “internationally recognised accounting firm to complete a confirmatory quality of earnings analysis, typical of an acquisition debt financing”.
“There is no guarantee that the proposed transaction will proceed, and neither the Sycamore consortium nor Billabong is under any obligation to proceed,” it added.
Billabong in exclusive takeover talks with Sycamore
