TPG rivals mull bids for Billabong – report

Sources told the Financial Times that the two global buyout firms, as well as local players Archer Capital and Pacific Equity Partners (PPE), were weighing up whether or not to enter the running. Billabong is seen as attractive because its share price has fallen 62% in the last 12 months. It currently stands at A$3.15. Prior to news of TPG's interest, it was trading around A$1.80.

The private equity firm initially bid A$3 per share, but then increased its offer to A$3.30. Billabong's board said this didn't reflect the full value of the company in a control situation. Gordon Merchant, Billabong's founder and major shareholder, said he wouldn't consider an offer of below A$4 per share.

The Merchant family is expected to hold out for a higher price than that at which institutional shareholders would sell.

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, and announced a 45% year-on-year fall in net profit for the second half of 2011.

Last week, it announced plans to close 150 stores and spin out the Nixon brand into a joint venture with Trilantic Capital Partners. The transaction will generate proceeds of $285 million for Billabong, which means its net debt will fall from A$525 million to A$259 million.

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• Topics
• Australasia
• Buyouts
• Consumer
• TPG Capital
• Australia
• buyout
• Consumer
• The Blackstone Group
• KKR
• Pacific Equity Partners
• Archer Capital