Billabong rejects improved $904m offer from TPG

Billabong's board said in a stock exchange filing that talks with TPG have now ceased, although it is willing to engage with any party that makes an attractive proposal. Gordon Merchant, the company's founder and major shareholder, earlier said that he didn't want Billabong to offer any assistance to the private equity firm, "even if the price TPG Capital offered was A$4 per share."

Having announced a 45% year-on-year fall in net profit for the second half of 2011, the company said last week that it plans to close 150 stores and sell off part of one of its most profitable brands.

It has agreed to set up a joint venture with Trilantic Capital Partners to operate the Nixon brand. Each party will hold a 48.5% stake, with the venture's management team holding the remainder. The transaction - which values Nixon at $464 million, representing an EBITDA multiple of around 9.2x - will generate proceeds of $285 million for Billabong. As a result, the company's net debt will fall from A$525 million to A$259 million.

Billabong has more than 700 stores worldwide and operates brands including Element, Von Zipper and Tigerlily, as well as Nixon. It has been struggling commercially due to deteriorating sales in Europe and Australia, intense competition and rising raw material costs.

Goldman Sachs and Allens Arthur Robinson are advising Billabong while Macquarie, Credit Suisse and Freehills are advising TPG.

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• Topics
• Australasia
• Buyouts
• Consumer
• TPG Capital
• Australia
• Consumer
• buyout