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Details on Industry Insight.
UPDATE ON TPG PROPOSAL
GOLD COAST, 27 February, 2012: On Monday, 20 February 2012, the Board of Billabong International Limited announced that it had received a revised non-binding, indicative proposal from TPG Capital (TPG) to acquire all of the shares in the company. The revised proposal was at the same indicative price of $3.00 cash per share as per TPG's earlier proposal, but did not preclude the Nixon transaction announced on Friday, 17 February 2012. The proposal continues to be subject to due diligence, subject to finance and conditional on a number of other matters.
The Board, together with its advisers, has reviewed the TPG proposal in detail. The Board has concluded that the indicative price of $3.00 per share proposed by TPG does not reflect the fundamental value of the company in the context of a change of control. The company has also been advised by its major shareholder, Gordon Merchant, that he would not accept an offer of $3.00 per share for his shares and that in his view the price is significantly below the underlying value of the company.
The Board has advised TPG of its position, and the position of the company's major shareholder, in relation to the indicative price of $3.00 per share, and has, together with its advisers, had a number of discussions with TPG to give it the opportunity to increase its proposed price to better reflect the value of the company. Those discussions are ongoing. It is not known at this stage whether those discussions will result in an improved proposal from TPG. The company will update the market when the outcome of those discussions is known.
Regardless of the outcome of the discussions, the Board believes Billabong has an attractive independent future. Billabong is a leading global wholesaler and retailer in the boardsports sector and its brands are world-renowned and highly valued, as demonstrated by the partial sale of its Nixon brand, which valued that single brand at US$464 million or 9.2x LTM EBITDA1. In addition, as a result of the strategic capital structure review, the company is now on a much more secure footing and is well-positioned to grow and create value for shareholders should the retail sector and discretionary spending rebound from their current lows.
Goldman Sachs is acting as financial advisor and Allens Arthur Robinson as legal advisor to Billabong.