Has Billabong attracted another suitor?

Surf wear maker suspends shares

a woman

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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.

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