D-day for iconic Coast surf brand

AFTER riding the waves of success and failure for more than 40 years, iconic Gold Coast surf brand Billabong will today face arguably its biggest test.

Shareholders must decide whether to back a bid from US-based Boardriders, owners of rival surf company Quiksilver, to take over the ASX-listed company for $1 per share – a vote which initially appeared all but certain to pass.

Billabong was worth well north of $3 billion at the crest of its global wave back in May 2007, while the Boardriders’ bid, which lobbed last December, values the Burleigh Heads company at just $198 million.

Six months ago, the stock was wallowing at half the offer price.

Though Billabong has fielded takeover proposals in the past, this one boasts the unanimous backing of the entire board including, crucially, founder and 12 per cent shareholder Gordon Merchant.

Mr Merchant knocked back several offers over the years, including a 2012 pitch from private equity firm TPG Capital for $3.30 per share (prior to a share consolidation), which valued the company at $850 million.

Boardriders is controlled by fund manager Oaktree Capital Management, which is Billabong’s equal largest shareholder with a 19 per cent stake. Its chief executive Dave Tanner said securing Billabong would strengthen and advance Boardriders’ position in the global retail sector.

However, when it was reported last week that two of Billabong’s other big investors, Ryder Capital and Adam Smith Asset Management, which have a combined 15.35 per cent, were potentially undecided on the deal, it threw a spanner in the works.

Neither were available for comment yesterday.

Ryder Capital chief investment officer Peter Constable last month questioned why the board was now backing a takeover, when at November’s AGM Billabong chief executive Neil Fiske seemed to be rallying shareholders and professing the company was showing signs of improvement.

Whatever shareholders decide at today’s meeting, it will be a watershed moment.

Either one of Australia’s most iconic companies will fall into foreign hands, or the future for Billabong will remain uncertain.