TPG abandons Billabong buyout

The Australian company said in regulatory filing that the process to evaluate change of control proposals has now concluded. It will continue to implement a transformation strategy intended to reduce costs and unlock value. This involves shuttering stores as well as simplifying the business to focus on core brands, building an e-commerce platform and seeking supply chain efficiencies.

Billabong's stock dropped 20% in the space of 20 minutes last week in response to reports that the deal was on shaky ground, with trading halted at A$1.03 per share. As of midday Friday it was trading around the A$0.84 mark, valuing the entire company at A$400 million.

TPG's offer of A$694 million - or A$1.45 per share - was submitted in July. The private equity firm bid A$841 million for the asset five months earlier, the downward revision coming after a poorly received rights issue prompted a decline in Billabong's share price.

This company 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.

Billabong projects an EBITDA of A$100-110 million for the 2013 financial year. However, TPG's due diligence issues are reportedly tied to doubts about medium-term earnings forecasts and the health of the core Billabong brand.

Last month Bain Capital submitted an offer that matched TPG's valuation but pulled out of the running after spending a fortnight conducting due diligence.

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