Long-suffering shareholders in surfwear group Billabong look likely to suffer one last indignity after the company announced late on Tuesday night it will grant exclusivity to one of its two takeover suitors at a takeover price of 60¢ a share, nearly half the price offered earlier this year and a long way from the $14 the share price hit in 2007. It raises the prospect that Billabong chief executive Launa Inman, who took the reins at the fashion retailer only last May, will leave the group and will not get a chance to implement her transformational strategy to rescue the finances of the business.
Billabong shares will exit a trading halt on Wednesday morning as the company enters 10 days of exclusive negotiations with a takeover consortium led by its own US executive Paul Naude and private equity firm Sycamore Partners.
If the deal is done at 60¢ a share, it will value Billabong at about $287 million. Last year, before the surfwear group triggered a massive capital raising that almost doubled the shares on issue, Billabong directors rejected an initial takeover offer from private equity group TPG of $3 and then another at $3.30 a share.
Before the trading halt and suspension last month, Billabong shares were trading at 73¢.
Crucially, it looks like Mr Naude and his private equity partners have won the in-principle backing of Billabong founder, director and major shareholder Gordon Merchant as well as fellow director Colette Paull, who combined account for 16 per cent of Billabong's issued shares.
Under the Sycamore proposal, Billabong shareholders can take 60¢ a share in cash or accept scrip in a Sycamore affiliate to be incorporated for the purposes of making the bid for Billabong.
A condition of the Sycamore proposal is that scrip elections are received for at least 15 per cent of the shares in Billabong.