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PRIVATE equity group TPG International has again moved to take over Billabong (BBG) with a proposal worth $694 million – $149 million less than previously offered in February.
Burleigh Heads-based Billabong announced the offer to the Australian Securities Exchange (ASX) this morning, after TPG formally approached the company last night.
TPG has offered $1.45 per share, a 32 per cent premium on this morning’s price. It is an indicative, non-binding and conditional offer and the price may be refined when the books are laid bare.
BBG rejected TPG’s $3 and $3.30 a share ($843 million) offers during February. Company founder and majority shareholder Gordon Merchant had opposed them, saying it did not reflect the business’ underlying value.
The company went on to sell half of its watch brand Nixon, appoint Launa Inman as new chief executive and raise $225 million in capital on the share-market, which added millions of extra Billabong shares to the market. When announcing its capital-raising venture, BBG also issued a profit warning.
The new proposal is subject to due diligence and conditional on BBG having net debt of around $100 million and sufficient debt financing. The company must also retain ownership of its existing brands.
Colonial First State Investment and Perennial Value Management have also agreed to sell their combined 14.5 per cent share in BBG’s issued capital to TPG.
Under the proposal, Merchant and non-executive director Colette Paull will be able to roll all, or part of their respective shareholdings in the company.
Their decision whether to rollover will not change remaining terms of the proposal.
At the time of TPG’s initial takeover bid Merchant wanted no less than $4 a share, but recently admitted he would reconsider.
Goldman Sachs is advising BBG on financial aspects while Allens Arthur Robinson is handling the legals.
BBG shares are up more than 20 per cent this afternoon, at $1.327.
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