In play again: Billabong executive drops in with $526 million bid
It is believed Mr Naude, backed by a consortium of financiers that includes participation by private equity, has lobbed an offer of $1.10 per share on the boardroom table that he once shared with other directors, although the takeover offer is highly conditional and reliant on due diligence.
The takeover bid, Billabong's third in a year, will likely disrupt the chief executive's concentrated plans to turn around the embattled youth apparel and merchandise retailer with the man up until November in charge of the Americas division - Billabong's biggest region by sales and profits - now actively working against her and other directors to seize control of the company.
"I would imagine there will be consistent speculation about takeovers and [that] must be quite disruptive to the business," said Credit Suisse analyst Grant Saligari.
"It must be making it difficult to attract and retain good people so I think this constant speculation can't be good in terms of establishing a stable business and getting on with the job they need to do."
Shares in Billabong were placed in a trading halt on Monday as word leaked that a bid by Mr Naude and his team had been presented to the Billabong board over the weekend, but not before more than 6.5 million shares were traded during a brisk session, with the stock gaining 4.5¢, or 4.8 per cent, at 98¢.
As fears mounted that investors were trading in an uninformed market, Billabong belatedly placed a halt on the stock, with an announcement expected as late as Tuesday about the fresh takeover approach.
"The company is in a trading halt and we will make an announcement at the appropriate time," a statement from Billabong read.
Four weeks ago Billabong announced to the shock of investors that Mr Naude would temporarily step aside as a director and head of its Americas operation for a period of six weeks as he advised on a potential leveraged company buyout. His then departure came only five weeks after US private equity fund TPG walked away from a $695 million takeover proposal and followed another withdrawn takeover bid from a rival private equity firm.
There were unconfirmed reports on Monday night that Mr Naude had attracted New York-based private equity business Sycamore Partners to his bidding consortium.
Mr Naude is in a prime position to judge the value of Billabong and its earnings potential. A 14-year veteran at the company, having been president of the American operations since 1998, he was appointed a director in 2002 and is responsible for a division that last year generated $750.3 million in sales, representing nearly half of Billabong's annual revenue. The Americas region also contributed just under $60 million in pre-tax earnings, or 46 per cent of total group earnings.
At Billabong's annual meeting last month Mr Naude received the highest "no" vote for his re-election to the board of any director also up for election, with 129.95 million shares voted against him, or 45 per cent of the total vote.
At the full year, Billabong declared a $275.6 million loss for the 2011-12 financial year as $537.5 million in asset write-downs and restructuring costs plunged the company into the red.
Frequently Asked Questions about this Article…
The takeover approach was led by Paul Naude, the former head of Billabong’s Americas division, backed by a consortium of financiers that reportedly includes private equity participation. The offer was reported as $1.10 per share (valuing the deal at about $526 million) and is highly conditional and subject to due diligence.
The bid could disrupt the company’s turnaround work because Naude was a senior executive in the Americas — Billabong’s largest region — and is now pursuing control against the current board. Analysts in the article warned that takeover speculation can make it harder to attract and retain staff and unsettle management’s recovery plans.
Following the leak, more than 6.5 million Billabong shares traded in a busy session with the stock rising to 98¢ (up about 4.8%). The company then placed the stock in a trading halt while it prepared a formal announcement, citing concerns about an uninformed market.
No. The offer is described as highly conditional and reliant on due diligence. The article also notes previous private equity approaches (including a $695 million proposal from TPG) were withdrawn, highlighting the uncertainty around whether a bid will be completed.
Naude is a 14‑year Billabong veteran who served as president of American operations since 1998 and was a director from 2002. The Americas division he ran generated about $750.3 million in sales — nearly half of the group’s revenue — and contributed just under $60 million in pre‑tax earnings, roughly 46% of group earnings.
The article says the consortium backing Naude includes private equity participation. There were unconfirmed reports that New York‑based Sycamore Partners had joined the bidding group. It also notes that U.S. private equity fund TPG previously walked away from a $695 million proposal.
Billabong reported a $275.6 million loss for the 2011–12 financial year, largely driven by $537.5 million in asset write‑downs and restructuring costs. Those poor results are part of the backdrop for takeover interest and investor concern.
Investors should watch for the company’s formal announcement when the trading halt is lifted, any confirmation of the financiers backing the bid, updates on due diligence or conditions, the board’s response, and continued stock volatility. Monitoring official ASX releases and company statements will provide the clearest, market‑moving information.
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