Has Billabong attracted another suitor?

Surf wear maker suspends shares

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Beleaguered surf wear maker Billabong International (ASX: BBG) has requested its shares be suspended, so that the company can progress discussions with interested parties.

Two days ago, the company went into a trading halt, “in relation to possible transactions affecting the company, including in connection with the bid by Sycamore Partners”. That bid was for 60 cents a share in cash. Shareholders were also given the option of retaining a minority unlisted stake in Billabong, up to 25% of the company.

While it’s hard to determine exactly what’s going on, the language used in the announcement does suggest that another party besides Sycamore Partners is interested in part or all of Billabong. In January, Altamont Capital Partners and VF Corp announced that they would consider a bid as high as $1.10, matching Sycamore Partners (in conjunction with Billabong director Paul Naude) original bid.

Sycamore revised its bid down to 60 cents a share, and Billabong entered a 10 business day period of exclusive discussions with Sycamore recently, but it now appears that Altamont and VF Corp may have re-entered the scene.

VF Corp has previously reported that it was only interested in the Billabong brand, while Altamont was more interested in acquiring the rest of the business, including the retail network. Sycamore’s latest indicative bid was for the whole business.

Given Billabong’s announcement today, it seems that a split of Billabong’s brands is now more likely, unless a new party has taken an interest.

In the last 14 months, Billabong has faced five failed takeover offers. The company rejected a bid for the company at $3.30 a share in February 2012, before receiving offers of $1.45 from two parties, then another two lower offers at $1.10, and the latest 60 cent deal from Sycamore.

There’s also no guarantee that that bid will stand, or that shareholders will approve a deal at 60 cents – which is below the $287 million of inventory on Billabong’s books. Shareholders may want to give the company more time to realise the benefits of the strategy put in place by new CEO Launa Inman, who was appointed in May last year.

Foolish takeaway

Shareholders may be hoping that a competing bid is in the offing, but it’s seems more likely to be a deal hiving off the company’s assets to separate parties, and may still disappoint shareholders.

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. Chances are even if you don’t own Telstra shares directly, your superannuation fund does. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here to find out whether to buy, sell, or hold Telstra in this brand-new FREE report.

More reading

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). Motley Fool writer/analyst Mike King owns shares in Billabong.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »