TPG Capital, the buyout company run by David Bonderman, offered to buy Billabong International Ltd. for A$765 million ($823 million) after a slump in the surfwear maker’s earnings and share price.
The offer was worth A$3 a share, the Gold Coast, Australia-based company said today, a 68 percent premium to the previous closing price. Billabong said it’s proceeding with asset sales, job cuts and store closures. The shares climbed as much as 64 percent.
Billabong, with 677 stores globally and brands including Element and Von Zipper, became a target after its share price more than halved since cutting forecasts on Dec. 19 and flagging a review of its capital structure. While bids will be considered, the company is instead selling a majority stake in its Nixon label to cut debt and “stabilize” its balance sheet.
“The TPG offer at A$3 is quite opportunistic when you consider the value of the business and the value of its brands,” said Tim Montague-Jones, an analyst at Morningstar Inc. in Sydney. “I don’t think they would sell at A$3 and it would have to be a lot higher than that.
Billabong rose 46 percent to A$2.62 at the close of Sydney trading, after climbing as high as A$2.93 earlier today.
A Sydney-based spokeswoman for TPG declined to comment on the proposal.
Buyout firm Trilantic Capital Partners will buy 48.5 percent of Nixon and management will acquire a 3 percent stake, valuing the brand at $464 million, Billabong said.
‘‘The board could not risk the future of the company or ignore the bird in the hand’’ to examine the proposal from TPG Chairman Ted Kunkel said on a conference call. ‘‘Nixon was the best available option that had the highest degree of certainty.’’
Billabong’s total debt stands at A$851 million, according to data compiled by Bloomberg. Of that, A$484 million falls due in 2013 and the remainder matures the following year, the data show.
The company has made at least 15 acquisitions in the past 10 years, adding brands such as swimwear label Tigerlily and retail outlets.
The TPG proposal was conditional on access to financial data, exclusivity and Billabong agreeing not to sell assets.
The company began looking at options for its balance sheet amid a collapse in earnings caused by stalling consumer spending in Europe and Australia and a surge in the Australian dollar.
Billabong today reported a 72 percent slump in earnings, with net income dropping to A$16.1 million in the six months ended Dec. 31.
Billabong expects to close 100 to 150 stores from its global network, which includes 302 shops in Australia and New Zealand and 250 in the Americas.
The store closures, and plans to cut A$30 million from costs, will result in about 400 jobs being lost, it said.