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THREE months after breaking free from the shackles of Billabong’s (ASX: BBG) ownership, online surfwear retailer SurfStitch Group may be about to reap a bonanza for its founders Lex Pedersen and Justin Cameron (pictured left to right).
The company could be worth as much as 700 per cent more than the duo had paid Billabong in the August buyout, as SurfStitch affirmed its global dominance in the online sportswear market through the acquisition of UK-based competitor Surfdome.
The Burleigh-based SurfStitch, which is the world’s leading online action sports store, has stitched up its market presence in northern Europe and the UK through the Surfdome acquisition, and laid the groundwork for a planned $350-$450 million public float of the business as early as next month.
The target value of a listed SurfStitch is a far cry from the $35 million deal struck by Pedersen and Cameron in August to buy back 51 per cent of their company owned by Billabong.
The deal also included the troubled surfwear giant’s US online business, Swell.com.
Reports suggest that SurfStitch could list on the Australian Securities Exchange in December and that the company could be valued as much as $450 million, although this has yet to be confirmed by the company.
However, SurfStitch has confirmed that it plans to maintain its headquarters on the Gold Coast despite its global expansion moves.
SurfStitch relocated from Sydney following the initial tie-up with Billabong in 2010 and now employs about 200 staff, with the Gold Coast also home to a major warehouse facility.
SurfStitch says the acquisition of Surfdome is aimed at capitalising on strong growth the company has experienced from its existing European operations.
The company says the two businesses had a combined growth rate of 50 per cent in Europe over the past 12 months.
Surfdome was established in 2006 by Justin Stone, who takes on the role of managing director of SurfStitch Group Europe overseeing operations of the merged group on the continent.
Stone had a 49 per cent interest in Surfdome prior to the acquisition, with Surfstitch acquiring the majority stake from Quicksilver.
Surfdome offers 900 products online across more than 125 countries and is reported to have turnover of $82 million last financial year.
“We are excited to welcome Justin and the Surfdome team into the SurfStitch Group,” says Pedersen in a statement.
“Having watched the successful growth of the Surfdome business in the UK and broader European market with interest since our launch in Europe, we always viewed an opportunity to combine our businesses and leverage the strong operational synergies that exist.”
SurfStitch has a strong market presence in southern Europe, including France, Spain and Italy, while Surfdome has an established presence in the UK, Germany and Nordic countries.
The combined group boasts 2.5 million customers on its database, representing its key 15-25 year demographic, with more than 500,000 visits daily on their websites.
SurfStitch has laid the groundwork for a public listing by bolstering its board. The company has appointed former Myer Group chairman and Just Group CEO, Howard McDonald, as chairman and former David Jones chief financial officer, Stephen Goddard, as non-executive director.
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