BILLABONG FLEXES MUSCLE IN ACQUISITION BID
23 July 2010,
LISTED surf retailer Billabong International (BBG) has again got its way after retailer Zumiez pulled out of the acquisition tussle to take over the Canadian West 49 chain.
The company announced last week that it entered due diligence to acquire the Canadian West 49 surf chain. Surf retailer Zumiez had indicated that it could make an offer in excess of Billabong's $C1.30 ($1.43) per share bid, subject to the completion of due diligence, during which the target company would be subject to a standstill agreement. Zumiez, also a retailer and stockist of Billabong products decided against the bid.
Billabong announced on June 30 that it had entered into a definitive acquisition agreement with West 49, which would see Billabong acquire W49 for C$1.30 per share.
The Burleigh Heads company this week acquired Californian brand RVCA for an undisclosed sum. The company’s acquisition of RVCA will contribute around 2 per cent of Billabong group revenue and will be EPS neutral in the 2010-11 financial year. The purchase price is not considered material.
The California-based company was founded in 2000 as an art and design-driven brand focusing on a diverse range of youth activities.
Billabong chief executive Derek O’Neill says RVCA is one of southern California’s most exciting emerging brands.
“RVCA is not defined by any single sport or culture. It represents a community of culturally aware youth and is inspired by a diverse range of interests, each of which is underpinned by an original, highly creative design element,” said O’Neill in a statement to the ASX.
“It is a brand that has developed a very strong presence in the United States, particularly in southern California, on the strength of its fashion-forward ranges in categories including art-driven t-shirts, denim, wovens, boardshorts and, more recently, its girls’ line.”
The bulk of RVCA’s revenue is currently generated in the US, while its expansion into other key markets including Australia and Europe is in its infancy.
Brand founder Pat Tenore says he and his existing management team will continue to drive the development and growth of the brand.
“By joining with Billabong we can retain our focus on our creative strengths, while leveraging the distribution and supply chain infrastructure and support of the Billabong group,” he says.
Billabong’s surf team was rocked last week when one of its stars suffered a deep gash to his foot while surfing at Snapper Rocks on the Gold Coast.
World no.8 and defending event champion Joel Parkinson (pictured) will not compete at the Billabong pro in South Africa starting this week – an event that is perfectly suited to the natural footer’s full rail surfing.
Billabong shares today opened at $9.10.