Billabong to Decide on TPG Due Diligence Within Days

Billabong International Ltd. will decide “within days” whether to allow TPG Capital access to the surf-wear maker’s financial data after the buyout firm’s A$695 million ($711 million) bid, Chief Executive Officer Launa Inman said.

TPG, which is run by David Bonderman, returned yesterday with an A$1.45 a share offer, five months after Gold Coast, Australia-based Billabong rejected a takeover proposal. Since the private equity firm offered A$3.30 a share in February, the surfwear company has hired Inman, sold new stock at a discount and cut earnings.

The buyout firm would allow Billabong directors and investors Gordon Merchant and Collette Paull, who previously opposed any offer below A$4 a share, the option of exchanging their stakes for a holding in the new entity, according to the statement from the Billabong. Merchant, who founded the company and is its biggest shareholder, and Paull are still taking part in board deliberations, Inman said, indicating the two have yet to accept TPG’s separate offer.

“If anything changes, protocols are in place to deal with that,” Inman said today in a phone interview, without elaborating.

Inman, who was named to the role in May, said her time at the company had been a “baptism of fire” and that some investors were disappointed that TPG’s previous offer was rejected. Management is still working on a strategy presentation scheduled for next month, she said.

Colonial First State Investment Ltd. and Perennial Value Management Ltd. agreed to sell about 12.5 percent of Billabong’s issued capital to TPG, the surf-wear company said yesterday. Perennial agreed a price of A$1.50 a share and Colonial agreed to A$1.45 a share, TPG said today in a separate regulatory filing.

If TPG pays a higher price, both shareholders keep the increase, the buyout firm said. If a third party pays a higher price for Billabong, Colonial takes 80 percent of the upside while Perennial gets 50 percent, TPG said.

The February approach valued Billabong at about A$851 million based on the 258 million shares it had at the time.

Since then, the company has increased its issued capital by 86 percent after it raised A$225 million selling new stock at a discount to repay debt.

Billabong rose 0.4 percent to A$1.32 at the close of trade in Sydney. The stock has fallen 72 percent in the past year.

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