TPG’s Billabong rival abandons bid

The Australian company's stock slumped on the news - which prompted concerns that TPG might now reduce its offer - and was trading down nearly 7% at A$1.35 by mid-afternoon on Thursday. TPG has said it will pay A$1.45 per share in cash.

Announcing that the new bidder had pulled out, Billabong added that TPG is still inspecting its books. The board hopes that this will lead to an improved valuation and fewer conditions tied to the transaction. The private equity firm has said the due diligence process could lead to an increase or decrease in the offer price.

Prior to its latest A$694 million offer, TPG submitted a bid of A$841 million for Billabong in February. The steep drop reflects the fall in the company's share price following the weak response to a rights issue intended to help pay down a large debt pile.

Billabong embarked on an aggressive expansion strategy but sales are struggling in the face of tough competition and a weak retail environment. The company has begun executing plans to simplify its business by focusing on core brands, building out its global e-commerce platform and seeking supply chain efficiencies.

This comes after it posted a net loss of A$275.6 million for the 2012 fiscal year, compared to a profit of A$119.1 million 12 months earlier. Financial performance was affected by one-off charges of A$336.1 million, including the closure of underperforming stores and impairment charges. This is net of a A$201.4 million gain arising from the spinout of the Nixon brand into a joint venture with Trilantic Capital Partners.

If the deal goes through, it would be the latest in a string of PE-backed take-private deals in Australia, responding in part to lower public market valuations. Offers have met with a mixed response from management.

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