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Almost before substantive negotiations could begin, Zumiez has withdrawn its bid to acquire Canadian action sports retailer West 49, Zumiez said in a statement released Tuesday afternoon.
Zumiez said it was unable to come to terms with West 49 over what steps it could take to complete its due dilligence review.
West 49 released a statement Wednesday morning that said it told Zumiez it could "review the same information that was made available to Billabong and in the same manner as it was made available to Billabong, subject to Zumiez entering into the form of confidentiality agreement required by the existing acquisition agreement with Billabong."
Now that Zumiez has declined pursue that path, West 49 said there is no expectation that Zumiez will make a proposal that is superior to Billabong's.
The announcement today appears to clear the way for Billabong to complete its planned acquisition of West 49.
West 49 operates 138 mostly mall-based stores under five banners in Canada, including five Billabong stores.
Click here to read our Executive Edition interview earlier this week with Billabong North America President Paul Naude about the acquisition. And read our interview with West 49 CEO Sam Baio about why West 49 wants to merge with Billabong.
Here is the West 49 press release issued Wednesday morning, followed by the Zumiez press release issued Tuesday afternoon:
BURLINGTON, ON, July 14 /CNW/ - West 49 Inc. (TSX: WXX - News; the "Company"), Canada's leading action sports retailer, today announced that Zumiez, Inc. ("Zumiez"), a U.S.-based action sports retailer, has advised the Company that it has elected to discontinue its pursuit of an acquisition of the Company.
As previously disclosed by the Company on July 9, 2010, Zumiez had advised the Company that, subject to a satisfactory due diligence review in its sole discretion, it would be prepared to make an offer, that would not be subject to a financing condition, to acquire all of the outstanding common shares and preferred shares of the Company for a cash price in excess of C$1.30 per share.
Following receipt of Zumiez's proposal and in accordance with the terms of the existing acquisition agreement between the Company and Billabong International Limited ("Billabong"), the special committee of the board of directors offered to allow Zumiez to review the same information that was made available to Billabong and in the same manner as it was made available to Billabong, subject to Zumiez entering into the form of confidentiality agreement required by the existing acquisition agreement with Billabong.
However, Zumiez has advised the Company that it is not prepared to proceed with the due diligence process on that basis at this time. Accordingly, the Company's board of directors has concluded that there is no longer a reasonable expectation that Zumiez will make a proposal that is financially superior to the Billabong transaction.
The special committee and the board as a whole reiterate their continued support for the Billabong transaction and confirm their unanimous conclusion and recommendation that the Company's securityholders should vote in favour of the Billabong transaction, under which the Company's common shares and preferred shares would be acquired at C$1.30 per share.
The agreement with Billabong remains in effect, and further details of the Billabong transaction are expected to be included in a proxy circular to be mailed to shareholders in due course.
West 49 Inc. is a leading Canadian specialty retailer of apparel, footwear, accessories and equipment related to the youth action sports lifestyle. The Company's stores, which are primarily mall-based, carry a variety of high-performance, premium brand name and private label products that fulfill the lifestyle needs of identified target markets, primarily tweens and teens.
At May 1, 2010, the Company operated 138 stores in nine provinces, under the banners West 49, Billabong, Off The Wall, Amnesia/Arsenic and D-Tox. The Company's common shares are listed on the Toronto Stock Exchange under the symbol WXX. The Company has approximately 64 million common shares outstanding.
On page 2: Zumiez press release announcing its withdrawl