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Sycamore Partners backs Naude’s $555m offer for Billabong

17 Dec 2012

Stricken Australian surfwear brand Billabong has received a takeover offer from director Paul Naude backed by Sycamore Partners – reigniting a protracted sale process that has also seen interest from global buyout titans TPG and Bain Capital.

Naude and the New York private equity firm have tabled a bid worth A$1.10 a share, valuing Billabong at A$527m ($555m), Bloomberg reported on Monday, citing unnamed sources.

Paul Naude temporarily stepped aside as a director and executive of Billabong on November 19 to pursue a leveraged buyout, Billabong said at the time.

The news follows TPG Capital’s withdrawal of an A$694m ($714m) bid for Billabong in October, a move that caused the beleaguered Australian surfwear brand’s shares to plummet to a record low.

Shares in Billabong plunged 17 per cent to A$0.84 following the news, lower than the company’s 52-week low of A$0.93 and giving the company a market capitalisation of just A$341m.

Shares in Billabong are currently trading at A$0.98, giving it a market capitalisation of A$400m.

TPG’s walkout followed drawn out discussions over the sale of Billabong, which in September revealed that one of two suitors to buy the company, thought to be Bain Capital, had pulled out of takeover talks, leaving TPG as its sole remaining bidder.

TPG tabled a fresh bid for the company in July – less than a month after Billabong founder Gordon Merchant said he was open to another takeover bid after shunning TPG’s initial offer in February.

Merchant, who owns more than 15 per cent of the business, told the Australian Financial Review he was open to an offer of lower than A$4 per share, despite saying in February he would not accept an offer of less than that amount.

“I thought it was the right decision at the time . . . No one has lost more money than I have. I don’t have any set figure in my head, but I would consider [a lower offer than $4 a share],” he told AFR.

A structural review released in March revealed the business – which operates through a global network of 677 stores – plans to close between 100 and 150 loss-making and under-performing outlets to reduce rent expense and increase EBITDA, resulting in the loss of around 400 jobs.

Australian consumer companies have recently struggled under the weight of a strong Australian dollar, high interest rates and cost-conscious consumers, attracting interest from private equity firms.

Australian surfwear rival Rip Curl recently said had also received unsolicited takeover approaches from several international companies.

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