Billabong Rejects TPG Offer as Too Low

Australian surfwear business Billabong International has rejected a A$765 million ($820 million) takeover bid from private equity firm TPG as too low, writes reuters. But the company is still in talks with the global buyout firm about the company.

Reuters – Australian surfwear company Billabong International rejected a A$765 million ($820 million) takeover offer from private equity firm TPG as too low, but said it was still talking with the suitor.

Billabong said in a statement it has had “a number of discussions” with the global buyout firm and the talks were continuing.

“It is not known at this stage whether those discussions will result in an improved proposal from TPG,” the company said.

Private equity firms have targeted several Australian industrial and retail companies after sharp share price declines, as the non-mining sectors of Australia’s economy struggle under a strong currency, high interest rates and indebted consumers.

Billabong said the A$3-per-share offer did not reflect the value of the company and its largest shareholder, Gordon Merchant, would not accept it because it was “significantly below” underlying value.

Merchant, who founded the surfwear and boardsports company in the 1970s, holds 14.8 percent of Billabong, according to Thomson Reuters data. Newspaper reports have said Merchant’s allies hold another 4 percent to 5 percent.

Billabong shares were trading over A$9 a year ago, but its shares dived 44 percent on Dec. 19 after it warned that first-half earnings would slump due to softer sales in its main markets in Australia and the United States.

Earlier this month, it announced plans to close up to 150 underperforming stores out of the group’s 670 stores, and to sell its Nixon watch brand to pay down debt, to ensure it did not breach debt covenants.

Billabong shares were little moved on Monday, up 0.7 percent at A$2.93.