Australia's Billabong says consortium cuts takeover bid to $300 mln

SYDNEY Tue Apr 9, 2013 4:00am EDT

A Billabong employee opens the company store in central Sydney August 27, 2012. REUTERS/Daniel Munoz

A Billabong employee opens the company store in central Sydney August 27, 2012.

Credit: Reuters/Daniel Munoz

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SYDNEY (Reuters) - Australian surfwear company Billabong International Ltd (BBG.AX) will enter 10 days of exclusive talks with a consortium led by its former U.S. boss after the group cut its indicative takeover proposal by 45 percent to $300 million.

Paul Naude and private equity firm Sycamore Partners are now offering A$0.60 per share, Billabong said in statement on Tuesday, confirming reports the bid would be scaled back.

Billabong and its shareholders have endured a horrible year since rejecting a A$850 million ($883 million) bid from rival private equity firm TPG Capital TPG.UL, in February 2012.

Plagued with high debt from an ill-timed expansion and struggling as its brands fell out of favor, the company has sold assets, closed stores, replaced its chief executive and embarked on a new strategy as a series of takeover proposals came and went.

Naude and Sycamore Partners beat out a rival bid from a consortium comprised of private equity firm Altamont Capital Partners and U.S. clothing group VF Corp (VFC.N). Both bidders had initially proposed A$1.10 a share before conducting due diligence.

"I think it probably does progress. I don't think they have too many options left," said Jason Beddow, managing director of Argo Investments, which manages A$3.5 billion and has a small stake in Billabong. "It's such a small company now, such a small investment for anyone. I think it lost relevance as well."

The VF Corp and Naude offers were the fourth and fifth takeover approaches for the Australian company since February 2012, the first pitched at A$850 million and rejected as too low.

Billabong shares have been halted from trading since last week, having last traded at A$0.73. The stock, which has lost around two-thirds of its value in the past year, sank to an all-time low of A$0.63 last month.

The latest Sycamore proposal includes the option for shareholders to accept shares in a Sycamore affiliate to be incorporated to make the bid. Founder and top shareholder Gordon Merchant plans to accept the scrip bid in the absence of a higher offer.

($1 = 0.9622 Australian dollars)

(Reporting by Maggie Lu Yueyang and Lincoln Feast; Editing by Matt Driskill)

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