Billabong International Ltd. said Monday it has rejected a 765.3 million Australian dollar (US$821.4 million) takeover bid by U.S. private-equity firm TPG Capital, saying it doesn't reflect the company's value.
“The board has concluded that the indicative price of A$3.00 per share proposed by TPG does not reflect the fundamental value of the company in the context of a change of control,” Billabong said in a statement.
The Australian company which owns and sells brands including its namesake Billabong, Von Zipper and Tigerlily, also said its major shareholder, Gordon Merchant, who holds a 13 percent interest, had advised that he wouldn't accept TPG's offer and that the bid price was “significantly” below the target's underlying value.
Billabong said discussions aimed at giving the private-equity firm an opportunity to increase its offer price were continuing.
TPG made a bid for Billabong earlier this month on condition the company wouldn't sell down its interest in any of its assets. Billabong proceeded with a partial sale of its Nixon watch-and-accessories brand following a capital-structure review. It expects to receive about US$285 million from the Nixon transaction, which it plans to use to repay debt and avert a potential breach of its bank covenants.
TPG later renewed its bid and loosened its conditions to allow for the Nixon deal.
“Regardless of the outcome of the discussions, the board believes Billabong has an attractive independent future,” Billabong said in a statement. “As a result of the strategic capital structure review, the company is now on a much more secure footing and is well-positioned to grow and create value for shareholders should the retail sector and discretionary spending rebound from their current lows.”
