TPG still keen on Billabong despite asset sale

MELBOURNE: Private equity firm TPG Capital renewed a Us$825mil takeover offer for Billabong International, saying the Australian surfwear company’s planned sale of one of its most profitable brands would not be an obstacle.

The news sent Billabong’s share price up as much as 11%, surging for a second straight trading day.

TPG approached Billabong early last week with an A$3 per share offer worth Us$825mil, but attached conditions including no asset sales for the struggling retailer and manufacturer.

Billabong rebuffed the offer, announcing it would sell a half-share in its Nixon watch brand, one of its strongest brands, to raise Us$285mil to pay down debt.

The deal valued the Nixon brand at Us$464mil. That compared with Billabong’s market capitalisation before the takeover approach of Us$493mil. Billabong has more than 670 stores globally, but plans to shut up to 150 underperforming outlets.

“(The latest) proposal is subject to due diligence, subject to finance and conditional on a number of other matters, but it does not preclude the Nixon transaction announced on Feb 17 2012,” Billabong said.

TPG said it wanted, among other things, unanimous board recommendation to enter into a deal. It also did not want any shareholder distribution to be made after Feb 20 and stressed that Billabong retained existing ownership of all brands other than the proposed deal for its Nixon brand.

Billabong said it would consider TPG’S proposal and advised shareholders to take no action.

“Now that we have confirmation TPG is still interested, notwithstanding the Nixon transaction, that provides a little bit more concrete price support,” said Deutsche Bank analyst Michael Simotas.

On Friday, shares in Billabong leapt to a two-month high. — Reuters