Billabong Halts Stock Weighing Sycamore, Altamont Offers

Billabong International Ltd., Australia’s largest surf-wear company, halted its shares after receiving takeover bids that the Australian Financial Review reported were below initial A$527 million ($551 million) offers.

Billabong had received proposals and will make a comment on the situation once it’s finished talks with the bidders, the Gold Coast, Australia-based company said in a regulatory statement today. Altamont Capital Partners and Sycamore Partners Management cut their provisional A$1.10-a-share bids, the AFR reported without saying where it got the information.

A fair value for the owner of the DaKine and RVCA sports-wear labels is probably well below A$1 after repeated cuts to earnings forecasts, said Tony Wilson, an analyst at Evans & Partners Pty in Melbourne. The company posted a record loss Feb. 22 on A$567 million of charges as it wrote off most of the value of its main brand and breached terms on its debt.

“The business seems to be spiraling down -- who knows what kind of value you place ultimately on it?” Wilson said by phone. “What it costs to reorganize or restructure is anyone’s guess.”

The stock last closed at 73 Australian cents, a 34 percent discount to the A$1.10 a share provisional offers made by both takeover groups. Billabong is the second-worst performer in Australia’s benchmark S&P/ASX 200 index over the past 12 months, losing 67 percent of its market value.

The halt will remain until the start of trade on April 4 unless Billabong makes an announcement before then, according to the company’s statement. Companies are allowed to issue successive trading halts.

Separate Approaches

Billabong became a takeover target last year as it sold inventory below cost to clear shelf space, paid penalties to break store leases early, cut the value of its brands and posted its first annual loss since a 2000 listing.

TPG International LLC, the private equity group run by David Bonderman, made two separate approaches for Billabong last year. Another unnamed bidder that people familiar with the matter identified as Bain Capital carried out due diligence on a A$1.45 bid matching TPG’s second offer, before walking away in September.

Jesse Rogers and Stefan Kaluzny, who previously worked for consultant Bain & Co., put their private equity firms Altamont and Sycamore behind the rival offers for Billabong after three other approaches were rejected or scrapped since the start of


Brand Value

Altamont tied up with VF Corp., the largest U.S. clothing company and owner of the Timberland and Vans brands, while Sycamore worked with Paul Naude, Billabong’s Americas head who took leave from the company to pursue the bid.

VF Corp. is mainly interested in the Billabong brand, the Greensboro, North Carolina-based company said in a statement Jan. 14. The label, which Billabong in August said was valued at A$252 million, was written down to A$30 million at first-half results in February, amid falling orders in Europe and Australia.

A measure of consumer confidence in Billabong’s home market, which returned just four positive readings in the past 12 months, jumped to its highest level since 2010 last month after the country’s central bank cut interest rates to a half-century low in an attempt to stimulate the economy.

“There is clear scope to improve the performance of the business over the medium term,” Ben Gilbert, a Sydney-based analyst at UBS AG, wrote in a note to clients March 25.

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