Billabong extends trading halt as suitors hold back
The company made the announcement to the market on Thursday before a trading halt on its shares was due to be lifted.
It has received six takeover offers since early last year but none has succeeded.
Billabong said the suspension would remain in place until "the company is able to make an announcement in relation to such negotiations".
Speculation is mounting that the two suitors - both backed by private equity - have dropped their takeover offer as low as 80¢ a share, down from an initial proposal priced at $1.10.
One suitor is Sycamore Partners and Paul Naude, the other Altamont Capital and VF Corp, the US retailer behind brands such as Timberland, North Face and Vans. VF Corp has said its only interest is in the Billabong brand. Altamont is interested in acquiring the rest of the business, which includes the vast retail network.
Billabong set a deadline for the suitors before Easter. It called a trading halt on Tuesday when a resolution could not be reached.
Credit Suisse recently reassessed the company on the basis that bids failed to emerge, giving it a weighted valuation of 59¢ a share.
UBS retail analyst Ben Gilbert said the most likely outcome was a 91¢-a-share offer, based on the original eight-times earnings before interest and tax multiple before the most recent downgrade.
Without a bid, Billabong might need a $100 million capital raising to fix the balance sheet, he said.
Frequently Asked Questions about this Article…
Billabong called an indefinite trading suspension because negotiations with two potential suitors have dragged on. The company said the halt will remain until it can make an announcement about those negotiations.
The article says one bidder group includes Sycamore Partners and Paul Naude, and the other involves Altamont Capital together with VF Corp (the US retailer behind brands like Timberland, The North Face and Vans). Both suitors are backed by private equity.
Billabong has received six takeover offers since early last year but none have succeeded. Speculation in the article says the two current suitors reportedly dropped their offer to about $0.80 a share from an initial proposal of $1.10 a share.
According to the article, VF Corp has said its only interest is in the Billabong brand, while Altamont Capital is interested in acquiring the rest of the business, including the extensive retail network.
Credit Suisse reassessed Billabong and gave a weighted valuation of $0.59 a share after bids failed to emerge. UBS retail analyst Ben Gilbert said the most likely offer would be about $0.91 a share based on an earlier eight-times EBIT multiple.
The article notes that without a bid Billabong might need a capital raising of about $100 million to repair its balance sheet.
Billabong set a deadline for the suitors before Easter. It called a trading halt on Tuesday when a resolution could not be reached and later announced the halt would continue until it can update the market on negotiations.
For everyday investors, the indefinite trading suspension means there is temporary uncertainty about Billabong's share liquidity and outcome of takeover talks. The article highlights lower reported bids, analyst valuations, and the possibility of a $100 million capital raising if no deal occurs — all factors that could affect the stock's value and investor decisions.
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