BILLABONG TAKEOVER BID RUMOURS SWELL

Written on the 17 February 2012

BILLABONG TAKEOVER BID RUMOURS SWELL

A TRADING halt has been called on Billabong (ASX:BBG) shares amid swirling rumours of a $766 million takeover bid by US private equity giant TPG, but the company is staying hush on the offer.

The halt came pending the release of half-yearly results by the Gold Coast-based company and announcement of its strategic capital review. Billabong CEO Derek O’Neill would not comment on the offer prior to the announcement.

Press reports claim Billabong was approached by TPG on Tuesday at for $3 a share, compared to the current asking price of $1.79.

The deal would require approval from the Board and founder Gordon Merchant who is a majority shareholder with a 15 per cent stake.

At the company’s peak in 2007, Billabong shares hit $16 per unit and even at the start of last year were around $8. However, almost 35 per cent was wiped off the market cap leading into December 2011 after downgrades.

Billabong has been caught with under-performing stores, following a bricks and mortar buying spree in 2010-11 and soft sales in Europe.

However, the company remains upbeat on the eve of releasing its results with guidance indicating earnings before interest, taxes, depreciation and amortisation of around $70 million.

TPG is the same private equity firm that bought and relisted Myer – and now partly owns the Healthscope private hospital group. The takeover follows a voracious bargain hunting bonanza by cashed-up private equity players in the US.

Struggling underwear icon Pacific Brands is separately considering a takeover from KKR, estimated by some analysts to be worth $600 million.

The company behind famous brands including Bonds and Slazenger has not disclosed the value of the offer, which was made before Christmas.


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