A paltry $287 million offer for Billabong was not enough to set a floor under the embattled shares, which crashed to another low on Wednesday as analysts said the board had no option but to surrender to the private equity-backed bid by Billabong executive Paul Naude.
Trading for the first time in three weeks, Billabong shares slumped from 73¢ to 51¢ on high turnover, before closing at 53.5¢.
The Sycamore/Naude consortium has pencilled in a "non-binding" offer of 60¢ a share as it enters further negotiations with company management over a potential takeover.
Analysts said the latest valuation of the leisurewear retailer - which turned down an indicative offer of $3.30 a share in February last year - was probably a fair one.
"Failure of a bid to emerge and a return to current management's turnaround efforts seems unthinkable from Billabong's perspective," said Credit Suisse analyst Grant Saligari, who has a 50¢ valuation on the shares.
Citi's Siobhan Lee said: "In our view, the company is clearly in free fall and, when combined with a high debt position and lease liabilities, this deal represents the lowest-risk exit for existing shareholders."
Ms Lee is among a group of analysts who see further downside if a suitor does not emerge. This could include further earnings downgrades and "emphasis by the board about execution and refinancing risks still ahead" if the takeover bid is aborted.
UBS said Billabong might need to raise another $100 million from the market if the bid fails. Commonwealth Bank's retail analysts say it could be as high as $150 million. The company raised $225 million last year at just over $1 a share.
If it is forced into another raising it could dilute the shares even more, with UBS forecasting it could trade as low as 40¢ in the absence of a bid.
Billabong said in February it was being forced to give its bankers security over most of its assets and future earnings after the company breached its debt covenants.
Billabong posted a $536.6 million loss that month after writing off most of the value of its main brand.