Billabong Said to Receive $820M Bid From TPG
Billabong Halts Trading After Reported A$766 Million
Jack Atley/Bloomberg News
Billabong, based on Australia’s Gold Coast, has tumbled 78 percent in the past 12 months.
Billabong, based on Australia’s Gold Coast, has tumbled 78 percent in the past 12 months. Photographer: Jack Atley/Bloomberg News
Billabong International Ltd. (BBG), the surf-wear maker that halted its shares in Sydney today, received a A$766 million ($820 million) takeover approach from TPG Capital, according to a person with knowledge of the matter.
The buyout firm offered at least A$3 a share, or 68 percent above yesterday’s closing price of A$1.79, said the person, declining to be identified as the information is private. TPG, based in Forth Worth, Texas, was backed by funding commitments from Australian and international lenders, the Australian Financial Review reported earlier.
Billabong, based on Australia’s Gold Coast, has tumbled 78 percent in the past 12 months. The company hired Goldman Sachs Group Inc. to review its capital structure and weigh “all potential alternatives” amid a profit slump, it said in December.
The trading halt is “pending an announcement on the strategic capital structure review,” Billabong said in a statement to the Australian stock exchange today. The company, which is due to report earnings for the six months ended Dec. 31 tomorrow, didn’t mention the Australian Financial Review report or say whether it received an approach.
John Mossop, a spokesman for Billabong, said he couldn’t comment beyond the statement. A Sydney-based spokeswoman for TPG declined to comment.
According to the Australian Financial Review, several private-equity suitors have been weighing offers for Billabong, and Chairman Ted Kunkel received the bid from TPG on Feb. 14.
Fair Price
“It’s a fair price, given Billabong’s earnings base and the task ahead,” said Peter Esho, Sydney-based chief market analyst at City Index Ltd., a London-based provider of trading services in bonds, stocks and commodities. “Apparel is a very tough space and Billabong’s debt position is pretty worrying.”
Billabong, worth A$17.96 a share at its most in May 2007, is among Australian retailers suffering from a slump in consumer confidence. Electronics retailer JB Hi-Fi Ltd. has slumped about 39 percent in the past 12 months, while Myer Holdings Ltd., the nation’s biggest department store chain, has dropped 36 percent.
TPG, the buyout firm run by David Bonderman, sold its stake in Myer in a 2009 initial public offering that raised A$2.1 billion, Australia’s biggest that year. TPG and Carlyle Group bought Australian hospital operator Healthscope Ltd. for A$2.7 billion, including debt, in 2010.
Billabong’s total debt stands at A$852 million, according to data compiled by Bloomberg. Of that figure, A$484 million falls due in 2013 and the remainder matures the following year, the data show.
The company said Dec. 19 that profit in that period may fall as much as 26 percent, less than two months after predicting a “strong” rise in earnings.
Sales stalled in the company’s three key markets amid a cool start to the Australian summer, a drop in European demand and a decline in December sales in North America.
Billabong “is running out of options,” Andrew McLennan, an analyst in Sydney at Commonwealth Bank of Australia, said in a note yesterday, telling investors to watch for asset sales or a capital injection. “We see the risk of an equity capital raising being announced at the result or shortly after.”
Earnings before interest, tax, depreciation and amortization will fall to A$70 million to A$75 million in the six months to Dec. 31 from A$94.6 million a year earlier, the company said on Dec. 19.
To contact the reporters on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net; Brett Foley in Melbourne at bfoley8@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net
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