Billabong International Ltd has completed the previously announce purchase of California-based Nixon Inc., a leader in the premium watch and accessories boardsports market (see SEW_0552). The purchase was announced on December 22, 2005 and was conditional on approval by Nixons shareholders and clearance under Hart-Scott-Rodino.
The purchase price comprises an initial payment estimated at A$73 million ($53.6 million) and a conditional maximum deferred amount calculated as the greater of an estimated A$24 million ($17.6 million) or 2.25 times 2010 EBITDA. The payment of this maximum deferred amount to all Nixon shareholders is conditional upon both founders fulfilling their respective five-year employment contracts. If both founders fulfill less than the five-year term of their respective employment contracts, then the deferred amount is reduced in accordance with a sliding scale. The purchase will be fully debt funded by Billabong. Nixon is expected to comprise 5% to 6% of Billabong's group sales for the 2006-07 financial year.
