The guessing game over Billabong International's future ownership is not yet finished. One week ago, the Australian company said that its board of directors was giving itself ten working days to examine the latest nonbinding offer from a consortium led by Sycamore Partners, the private equity fund that has been backing the bid of Paul Naude, former head of Billabong's operations in the Americas. After conducting due diligence on the company, Sycamore proposed paying only 60 Australian cents a share for Billabong's shares, or nearly half its initial proposal of A$1.10 per share, but with an option to existing shareholders to retain a stake in the company. This would be accomplished by giving them a stake of up to 24.9 percent in a new company affiliated with Sycamore and created for the purpose of making the final bid.
Shareholders holding about 16 percent of the equity and linked to Billabong's founder, Gordon Merchant, indicated that they would be willing to accept this solution, receiving shares instead of cash. The Merchant clan had previously rejected the much higher price of A$1.45 a share offered for their holdings by Texas Pacific Group, feeling that Billabong had the potential to recover under its new management. However, the latest financial results have depressed the already battered share price of Billabong on the Australian stock exchange and led observers to feel that it needs a big injection of new capital. Billabong has reported a loss of A$537 million (€423.6m-$556.2m) for the first half ended last Dec. 31.
Billabong's stock price has plunged by nearly 90 percent over the past couple of years. It fell by 27 percent to 54 Australian cents when trading in the shares resumed last Tuesday. Sycamore's latest offer values the company at A$287.4 million (€226.7m-$297.7m). In the meantime, Altamont Capital and VF Corp., reportedly dropped out of the bidding process because they were only prepared to pay less than 50 cents a share. They had offered A$1.10 a share like Sycamore before analyzing the company's accounts.
