Sycamore proceeds on Billabong buyout with knockdown $300m offer

The consortium, which was put together by Paul Naude, a Billabong director, is willing to pay A$0.60 per share for all outstanding shares, valuing the company at A$287 million ($300 million). The original bid, subsequently matched by a competing offer from Altamont Capital Partners and VF Corp, valued Billabong at $527 million. Back in February 2012, TPG Capital offered A$841 million, only to be rebuffed by shareholders.

The incremental reductions in the offer price mirror the declines in Billabong's stock price, which reached a then all-time low of A$0.63 in March. Since the revised offer was announced last night, the stock had dropped 27% to A$0.54 as of early afternoon trading.

The Sycamore consortium has 10 business days to complete its due diligence. If the transaction proceeds, existing shareholders have the option of rolling over their interests into the acquisition vehicle via a scrip election. In the absence of a superior proposal, the families of Billabong founders Gordon Merchant and Colette Paul, which control approximately 16% of the company, will participate in the election.

Billabong 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. Adjusted EBITDA was down 40.9% to A$120.6 million. The company projects an EBITDA of A$100-110 million for the 2013 fiscal year and wants the figure to reach at least A$210 million by 2016.

After submitting its A$841 million offer last February, TPG returned six months later with a bid of A$694 million, which was subsequently matched by Bain Capital. Both subsequently withdrew after conducting preliminary due diligence.

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• Topics
• Consumer
• Buyouts
• Australasia
• buyout
• Australia
• Consumer
• Sycamore Partners
• Altamont Capital