SURFSTITCH FLOAT GATHERS MOMENTUM
Written on the 29 July 2014 by Nick Nichols
SURFWEAR group Billabong says it has yet to decide the fate of its majority shareholding in SurfStitch, with market rumours pointing to a buyout by its founders who are planning a public float of the online retailer.
Media reports have suggested that fund managers are meeting with SurfStitch executives on the Gold Coast this week to assess the value of the business, in which Billabong has a 51 per cent stake.
SurfStitch founders Lex Pederson and Justin Cameron hold the remaining stake, along with former Perpetual funds manager Charlie Lachester.
Billabong earlier this year revealed its interest in offloading its stake in SurfStitch as part of its debt-reduction strategy and a renewed focus on core brands.
“There has been no conclusion to the announced process, which is ongoing,” a Billabong spokesman tells Gold Coast Business News.
Billabong says its strategy is now focused on investing in its key brands having their own, stand-alone ecommerce sites, breaking away from the multi-brand model of both SurfStitch and its other online site Swell.
SurfStitch did not respond to requests for comment, but media reports have suggested that a SurfStitch IPO could value the company at $300 million - or more than half of Billabong’s market capitalisation of $520 million.
A sale at this level would be attractive to Billabong which announced as immaterial to its business the acquisition of SurfStitch in 2009.
Billabong’s shares have hit a four-month high of 56c this week in response to the sale rumours.
The Burleigh-based SurfStitch turns over about $80 million a year, but the company also manages Billabong’s online sales platforms as well as those of other clients.
Billabong CEO Neil Fiske has not made a public statement on the company’s activities since the release of the interim results in February.
The Billabong spokesman refers to Fiske’s statements at the time in regards to the company’s intentions for SurfStitch and its impact on the turnaround strategy for the sufwear business.
“Given the consistent growth and performance of these assets, we believe that there is an opportunity to progress our mono-brand ecommerce strategy and at the same time unlock value for Billabong shareholders,” Fiske said at the time.
Billabong has reiterated that it has been working towards separating its mono-brand online operations from the SurfStitch organisation since the beginning of this year.
A public float of SurfStitch, should it occur this year, will mark the third Gold Coast company to join the boards of the Australian Securities Exchange in 2014.
Hotel operator Mantra Group listed earlier this year in a $450 million float, while Bartercard has just announced a $58.5 million share offer with plans to list on September 4.
Author: Nick Nichols