Surfwear maker Billabong International (ASX: BBG) has gone into a trading halt, after shares in the company fell by 20%, hitting 63 cents at one stage.
The company says it has asked for a trading halt so that the company can investigate the reason for the trading levels, and the halt will remain in place until the earlier of commencement of trading on Monday 25 March, or when the company makes an announcement.
This appears to be an unusual step for a company given the ASX and regulators would normally be responsible for investigating any irregularities in trading, and price moves.
Billabong is currently the subject of two takeover bids for $1.10, with US-based retailer VF Corp and private equity firm Altamont Capital Partners on one side, up against Billabong director Paul Naude and Sycamore Partners. Rumours appear to be doing the rounds that at least one of those bids may have been withdrawn, which may have contributed to Billabong’s shares falling.
Additionally, research by a Credit Suisse analyst is doing the rounds suggesting that should both bids be withdrawn, shares in Billabong would be worth around 59 cents.
While final bids are due next week, the Australian Financial Review reports that sources close to both bidders expect two proposals to be submitted next Thursday. Whether those bids will still be for $1.10 remains to be seen, but the slide in Billabong’s share price over the past few weeks suggest final bids could be lower.
Billabong is targeting earnings before interest tax, depreciation and amortisation (EBITDA) of more than $210 million in 2016, as the company turns it business around, cuts costs, shuts under-performing stores and revitalises its existing stores. The transformation is being driven by Launa Inman, who was appointed managing director in mid-May of 2012. Ms Inman comes from previous roles at Target – owned byWesfarmers Limited (ASX: WES), and Woolworths Limited (ASX: WOW), and has a strong track record in retailing. According to the Australian Financial Review, Ms Inman lifted earnings at Target by 85% over six years
Should the existing bids fail to go ahead, we may see other bidders come out of the woodwork, or we could see founder and Billabong’s largest shareholder Gordon Merchant attempt to take the company private.
The dance around Billabong has a few more steps left in it. Where it will end nobody knows.
The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Billabong.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
- Why PWR Holdings Ltd could see its share price rise from here – July 21, 2017 12:11pm
- Fortescue Metals Group Limited share price sinks on native title decision – July 20, 2017 4:23pm
- 5 overlooked finance shares to add to your watchlist – July 20, 2017 2:33pm