West 49 said Zumiez Inc. has indicated it was prepared to top Billabong International's offer for the Canadian action sports retailer although it hasn't submitted a bid. West 49 said it continues to support its existing deal with Billabong, but a special committee plans to negotiate with ZUMZ on a firm offer.
Last week, Australian-based Billabong offered to buy West 49 for CN$1.30 per share, representing a 136% premium at the time. The total value of the all-cash deal was CN$99.0 million ($94.3 million). The move would lift Billabong's store count from 90 to approximately 230 doors in the North American region.
West 49 said Zumiez was seeking “to enter into a confidentiality and standstill agreement with the company,” before making its formal bid that it expects would “reasonably be expected to lead to a superior proposal” to Billabong's offer. Given Zumiez's recent announcement that it plans to enter the Canadian market, West 49 has concerns about providing such competitive information to Zumiez. As reported, Zumiez is looking to open its first store in the country in the greater Vancouver area.
Within the terms of its Billabong agreement, West 49's special committee intends to negotiate with Zumiez to determine if “its offer can become a firm offer that is financially superior” to Billabong's bid. In the event that Zumiez does make a better offer, Billabong would have the right to make a higher bid within five days.
Based in Ontario, West 49 has 138 primarily mall-based stores in nine provinces across Canada under the five banners. These include West 49, with 81 locations; D-Tox, 19; Off The Wall, 16; and Amnesia/Arsenic, 17. It also operates five Billabong stores under license in Canada.
