BILLABONG TAKEOVER SAGA DRAGS ON

Written on the 24 April 2013

BILLABONG TAKEOVER SAGA DRAGS ON

BILLABONG drawn out takeover speculation is set to drag out further after the company’s shares were voluntarily suspended from trading this morning.

Shareholders were expecting some news today from the Gold Coast-based sportswear group regarding two potential takeover bids that have been hanging over the company since January.

The company called for a two-day trading halt of its shares on Tuesday, raising some hope that an announcement would come from the company soon.

But this morning Billabong sought a voluntary suspension of trading in its shares, saying it needs more time to continue negotiations with the bidders.

“The company requests that the suspension remain in place until such time as the company is able to make an announcement in relation to such negotiations,” Billabong says in a statement to the Australian Securities Exchange.

The share suspension places a cloud over the timing of a takeover bid announcement from Billabong as suspensions are indefinite.

Some sources suggest that Billabong may have sought the suspension to give one of the bidders time to present their offer.

One bid is coming from US clothing giant VF Corporation and Altamont Capital Partners and the other from Paul Naude, the long-time boss of Billabong’s American operations, in conjunction with private equity firm Sycamore Partners.

The VF-Altamont bid was rumoured to be in jeopardy last month, a rumour that was scotched by Billabong which revealed both offers were still in train.

Some sources are now suggesting VF-Altamont has yet to secure full debt funding for a bid and that Billabong would want two competing offers on the table if it is to extract any value from the bid process.

Both bids were originally pitched at $1.10 a share, or $527 million, but since the offers were revealed in January Billabong’s shares have slipped to a low of 63c.
They last traded at 73c, with many analysts now forecasting offers could be presented around 80c a share.

Investors also have been rattled by repeated profit downgrades by the company over the past year, culminating in a net loss of $536.6 million for the December half year.

Billabong is forecasting a downgraded underlying profit of between $74 million and $85 million this financial year.

Billabong could not be contacted for comment.


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