Billabong gives Quiksilver parent the green light for takeover bid
Written on the 5 January 2018 by David Simmons
TWO of Australia's most iconic surfwear retailers are one step closer to becoming one now that Billabong (ASX: BBG) has given Boardriders the go ahead to takeover.
Billabong International Limited today announced it has entered into a deal with Boardriders, the parent company of major competitor Quiksilver, to acquire all of the shares in Billabong.
Boardriders will acquire every share at a price of $1 per share in cash via a schame of arrangement. The deal is estimated to be worth around $200 million.
Boardriders is controlled by funds managed by Oaktree Capital Management. Oaktree already holds 19 per cent of the shares in Billabong and is one of Billabong's two senior lenders.
Billabong directors have unanimously made a recommendation to shareholders that they vote in favour of the deal, in the absence of a superior proposal.
The board of Billabong says the $1 per share deal represents an attractive premium above Billabong's closing price of $0.78 per share on 30 November 2017; that date being the day Boardriders first approached Billabong with its proposal to acquire the company.
Billabong Chairman, Ian Pollard, says that shareholders face ongoing risks if they do not accept the Boardriders proposal.
"While Billabong has made significant operational progress in recent years, the Board is also mindful of the fact that, in the absence of the Scheme, Billabong shareholders face ongoing risks and uncertainties associated with the business," says Pollard.
"These include risks relating to the state of the global retail market as it affects both Billabong and its wholesale customers; the operations and project risks associated with the execution of Billabong's strategy; and risks relating to the refinancing of its debt."
"In particular, the Board considers that it will become necessary for Billabong to materially reduce debt if it is to continue with its current strategy."
Billabong CEO, Niel Fiske, says he is confident Boardriders will ensure the iconic Australian brand is both protected and nurtured.
"Billabong's brands' great strength is their authenticity and heritage," says Fiske.
"I'm confident those qualities will not simply be protected but enhanced by a new organisation that will have the scale and financial security to continue to support and build them as we enter into a new and dynamic retail environment."
Billabong has been subject to a number of takeover bids, including from US private equity groups TPG and Sycamore during the 2013 financial year when its annual loss swelled to almost $860 million.
The Gold Coast-based retailer recorded a $77 million loss in the 2017 financial year, worse than the previous year's $24 million loss.
The label also reaffirmed its 2018 full year guidance and expects earnings to exceed the prior year and to be between $51.1 million and $54 million.
Shares in Billabong International Limited are trading up 2.08 per cent to $0.98 per share at 12:14pm AEDT.
Business News Australia
Author: David Simmons