Billabong Director Explores Buyout After TPG Withdrawal

Billabong Director Explores Buyout After TPG Bid Withdrawal
TPG withdrew a A$694 million ($719 million) offer last month and ended talks after examining the company’s financial data. Photographer: Carla Gottgens/Bloomberg

Billabong International Ltd., Australia’s largest surfwear maker, said the head of its biggest unit is examining a potential buyout of the company, five weeks after TPG International LLC scrapped a bid.

Paul Naude, who has been president of the Americas since 1998, will stand aside for six weeks to seek talks with financiers and gain support for a bid proposal, the company said in a regulatory statement today. Billabong shares surged the most in four months on the announcement, which didn’t detail any potential price.

TPG withdrew a A$694 million ($719 million) offer last month and ended talks after examining the company’s financial data. Billabong has lost more than 90 percent of its market value since a peak in May 2007 after selling new stock at a discount to repay debt, closing stores, firing workers and posting a record loss amid a consumer slump.

“Paul’s generally viewed quite favorably by the market, which makes this an interesting trade,” Nick Berry, a retail analyst at Nomura Holdings Inc., said by telephone from Sydney. “If either a bid isn’t forthcoming or it gets knocked back it’s going to be very difficult for him to go back.”

Billabong shares rose 10 percent, the biggest gain since July 24, to close at 81.5 Australian cents in Sydney.

TPG scrapped its A$1.45 a share proposal last month. The buyout firm led by David Bonderman in February said it was prepared to offer as much as A$3.30 a share, which was rejected before the company sold new stock and posted its first annual loss.

‘Acting Independently’

Naude, who owns about 0.2 percent of Billabong according to data compiled by Bloomberg, was not solicited by the board, the company said in the filing. There is no guarantee a formal proposal will be made, the Gold Coast, Australia-based company said.

“He is acting independently,” Billabong said.

TPG, and a second buyout firm Billabong didn’t identify, walked away from making formal bids after examining the surfwear maker’s financial data. The second party was Bain Capital LLC, people familiar with the matter said Sept. 6.

Billabong said conditions for Naude’s plan include a bar on talks with parties to the previous takeover discussions and no contact with directors other than the chairman or chief executive officer.

While Billabong has been hurt by a consumer slowdown, Australia’s retail sector has shown improvement over the past six months as stimulus payments and cuts to interest rates boost household spending.

A measure of consumer sentiment recorded its first positive reading in nine months last week and Myer Holdings Ltd., the country’s largest department-store company by sales, rose by a record after reporting its first increase in quarterly revenue since investors led by TPG sold it back onto the market in 2009.

The Americas division headed by Naude accounted for about 47 percent of sales during the year through June and made up 225 of the Billabong’s 635 stores, according to a company presentation.

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