Billabong Bid Heating Up
A buyout offer from the United States for Billabong International Ltd. is creating turmoil in the Australian surf giant’s home territory.
Billabong stopped trading on the Australian Securities Exchange Dec. 17–19 after a buyout offer from Paul Naude, a director on Billabong’s board and the president of the surfwear giant’s Irvine, Calif.–based Americas division. He offered to acquire all of the company’s shares for 1.10 Australian dollars cash per share.
Naude’s offer was backed by Bank of America, Merrill Lynch and Sycamore Partners Management, a New York–based private-equity firm that is known for acquiring retailer The Talbots Inc. for $391 million in August. The proposal will be submitted to a due-diligence investigation, which could take four to six weeks.
Australian equities analysts criticized the takeover offer for distracting Billabong executives during a sensitive time in the company’s turnaround efforts. Questions also were raised on whether Naude would leave the company if his takeover attempt were rebuffed, whether the offer undervalued the company and whether Billabong could recover from its heavy debts, according to Australian news reports.
Naude’s offer received encouragement from Orange County, Calif., executives in the surf industry, said Shaheen Sadeghi, a former president of Quiksilver who currently is the owner of Lab Holding LLC, the developer of The Camp and The Lab specialty shopping centers in Costa Mesa, Calif.
Sadeghi said he believes Naude represents the best offer Billabong will receive. In October, two suitors, TPG International LLC and Bain Capital, investigated the risk associated with the company and then withdrew their offers.
“Paul would have greater sensitivity to the brand rather than a classic investment bank looking for quick return,” Sadeghi said.
Because it is a brand popular across the world, it doesn’t matter where executives are based, Sadeghi said. But no matter who ends up owning Billabong, they’ll have to make big decisions to bring the company back to financial health. “Regardless of who buys it, they’ll probably sell off other brands to stabilize Billabong,” Sadeghi said.
It could mean selling the most popular brands, such as RVCA and Element, in Billabong’s family of properties. Both RVCA and Element are based in Orange County.
On Dec. 20, Billabong announced Peter Bryant, the chief financial officer for Billabong’s Americas division, was named CFO for the entire company. He replaced Craig White, whose resignation was announced the same day.—Andrew Asch
