Foreign buyout beckons

BURLEIGH HEADS-based surfwear giant Billabong looks almost certain to fall into foreign hands by March after the directors swung their support behind a takeover offer from the Californian company that owns Quiksilver.

Billabong yesterday announced it has entered into a ‘Scheme Implementation Deed’ for Boardriders Inc to acquire all Billabong shares at $1 per security, which values the company at $198.1 million.

Boardriders is majorityowned by funds manager Oaktree Capital, which already holds 19 per cent of Billabong shares and is a major lender to the company.

The deal needs the approval of shareholders, who will get their chance to vote in March.

However, given major shareholders including foun- der Gordon Merchant, who has 12.8 per cent of the company, and US investment company Centerbridge, which has 19.2 per cent, want the deal to go ahead, it is unlikely to be blocked.

Billabong’s directors, including Mr Merchant and CEO Neil Fiske, said the deal is in the best interests of shareholders.

The reasons given included that the $1 per share offer is 28 per cent above Billabong’s closing price of 78¢ on November 30 – the day prior to the offer.

Chairman Ian Pollard said if a deal were not done, Billabong shareholders faced “ongoing risks and uncertainties”.

Billabong would likely have to cut its debt if it was to continue as an independent company, he said. The group would likely have to sell assets or tap shareholders for extra cash.