Billabong said it was in talks to sell itself for approximately U.S. $300 million. The Australian surfwear company announced that it has entered into a ten business day period of exclusivity with a group led by its former American chief executive, Paul Naude, and the buyout firm Sycamore Partners Management to acquire 100 percent of Billabongs shares for A60 cents (U.S. 63 cents) cash per share.
The exclusivity period will last for 10 days.
In an alternative option, Billabong investors can take shares in a new company affiliated with Sycamore.
The Sycamore/Naude offer is conditional on founder Gordon Merchant and his associate Colette Paull selecting shares rather than cash for their combined 16 percent interest in Billabong. Both have indicated they will accept shares, Billabong said.
The Sycamore group wants to own at least 75.1 percent of the affiliate company. If existing investors owning more than 24.9 percent of Billabong choose to take shares instead of cash, the share allocation will be scaled back.
The price tag is far below Billabong’s market value of around A$3.8 billion in 2007. It’s also well below indicative offers of A$1.10 a share made by the Sycamore-led consortium and a competing group involving VF Corp. (VFC) and Altamont Capital Partners. The two groups have been conducted due diligence for the past few months.
Both the Sycamore-led consortium and the group involving VF Corp. (VFC), the owner of brands including The North Face and Timberland, cut their bids following a fresh profit warning in February.
Since the two groups made their initial offers, Billabong has posted a first-half net loss of A$536.6 million and lowered its full-year guidance, citing difficult trading conditions in Europe and a disappointing performance from its Nixon watch brand.
The VF-Altamont group has now been frozen out of talks.
The company last year rejected a A$841.8 million offer from buyout firm TPG Inc. but had since seen its business deteriorate due to the global economic slowdown, a strong Australian dollar that diluted overseas income, and some challenges among its brands.