BILLABONG SHARES SLUMP AMID DAMNING SPECULATION

Written on the 9 October 2012

BILLABONG SHARES SLUMP AMID DAMNING SPECULATION

BILLABONG (ASX: BBG) shares plummeted in value today amid reports potential suitor TPG Capital is considering withdrawing its offer to buy the embattled Gold Coast surf wear company.

The share price slumped 18.63 per cent to $1.075 today, nearly 40 cents per share below the proposed takeover price.

The latest slide, which continues two years of woe for BBG shareholders, came after the Australian Financial Review reported sources close to the company as saying TPG was close to walking away from the due diligence process.

The private equity firm, which made a $694 million for BBG at $1.45 per share, has until October 24 to examine the financial state of the company.

AFR quoted a source as saying “tools were put down 10 days ago’’ after TPG reviewers assessed BBG’s core business to be “in decline’’.

Billabong has reacted to the speculation in an announcement to the stock exchange.

"TPG has confirmed it has not withdrawn from the sale process. As part of its due diligence investigations, TPG and its advisers have expressed concerns in relation to some issues, however discussions in relation to those matters are continuing."

The company, which was also forced to respond to a "speeding ticket" from the ASX, maintained it was under no obligation to accept any takeover offer.

The news comes only two weeks after another private equity group, the Boston-based Bain Capital, took just a fortnight of preliminary due diligence to scrap plans of moving on Billabong.

Billabong earlier this year announced its first loss ($276.6 million) since it was listed in 2001. Chief executive officer Launa Inman unveiled a rescue plan for BBG in August and insists the company’s future will not be affected by takeover speculation.


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