Billabong forced to accept painful takeover?

Billabong forced to accept painful takeover?

Australian fashion brand Billabong will be having exclusive talks with the Sycamore Consortium, led by their former boss Paul Naude, for ten days. The consortium made an offer on the company of 300 million Australian dollar (over 240 million euro) or 0.60 dollar per share. A year ago an offer four times as high was haughtily declined for being way too low.

Declined offer

Billabong has had a disastrous year after it declined an offer of 850 million dollar (almost 700 million euro or 2.70 euro per share) by TPG Capital, a rival private investor, in February 2012. That offer was deemed “too low”.

 

A badly timed, but costly expansion of the company on the one hand and diminishing success of its brands with consumers on the other hand forced Billabong International to sell assets and close shops. Along the way the CEO was replaced and the strategy of the company was adjusted on the basis of a few takeover bids.

 

Wrong assessment

Since the refused offer of TPG Capital Billabong only went downhill. Paul Naude, together with Sycamore Partners, succeeded in countering an offer of a consortium consisting of private investor Altamont Capital Partners and the American clothing group VF Corporation. Both bidders originally made an offer of 1.10 dollar per share, before starting an investigation of the company.

 

According to Jason Beddow, director of minor Billabong shareholder Argo Investments, the brand does not have much options left: Billabong has dwindled down to a small company, requires only a small investment and - still according to Bellow - lost most of its relevance.

 

After losing two thirds of its value in the past year, the stock was taken off the exchange to prevent worse. A month ago it reached its lowest value ever, only 0.63 dollar per share.

 

The latest offer of Sycamore gives stockholders of Billabong the option to obtain stock from another company of Sycamore that will be incorporated at a later date. Billabong founder and largest shareholder Gordon Merchant is considering taking the offer, if a better one does not come along.

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