By Gillian Tan
SYDNEY--Two U.S. consortia competing to acquire surfwear
retailer Billabong International Ltd. (BBG.AU) have lowered their
bids from an initial 526.8 million Australian dollars (US$542.6
million), people familiar with the matter said Tuesday.
The former head of Billabong's Americas division, Paul Naude,
linked up with New York-based private equity firm Sycamore Partners
Management in December to make an offer worth A$1.10 a share for
the company. A month later, VF Corp. (VFC), the owner of Timberland
and The North Face brands, teamed up with Palo Alto-based Altamont
Capital Partners to match the bid from Mr. Naude's group.
In a statement Tuesday, Billabong said discussions over the
separate takeover proposals were incomplete and talks were
continuing. Trading in shares of Billabong, which sells clothing
and accessories under its namesake brand and others including Von
Zipper, Tigerlily and Element, has been temporarily halted.
People familiar with the talks said both consortia had cut their
respective proposals below A$1.10 a share, declining to be more
specific. Shares in Billabong, which is being advised by Goldman
Sachs Group Inc. (GS) last traded at A$0.73, having touched a
record low of A$0.63 last month.
Billabong had a market value of A$3.8 billion as recently as
2007, but the company has recently been battling to reverse an
earnings decline triggered by the global slowdown, a strong
Australian dollar that has diluted overseas income, and the
dwindling appeal of its core brands among younger people. Sales in
the Americas and Europe have fallen sharply as cautious consumers
rein in spending or switch to other brands, leading to a build up
of surplus stock.
The company recently reported a A$536.6 million loss in the half
year to Dec. 31 after recording a A$567 million impairment charge
attached to the value of its brands and investment.
UBS analyst Ben Gilbert said in a note last week the likely
outcome is a revised offer of between A$0.91 and A$0.99 a share
following Billabong's profits warning in late February.
It's not the first time a bidder has lowered its offer for
Billabong. After an A$841.8 million offer was rejected in February
2012, global buyout firm TPG Inc. returned in July with a A$694.5
million proposal which was matched by Bain Capital. Bain and TPG
ceased takeover talks in September and October, respectively.
-Write to Gillian Tan at gillian.tan@wsj.com
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