AUSTRALIA: Billabong warns on profit as $524m bid confirmed
Australian surfwear brand Billabong today (19 December) confirmed details of a AUD524m buyout bid - but shares fell 13.3% after the company issued another profit warning.
The takeover bid from board director Paul Naude, the former head of Billabong's Americas business who is teaming up with New York-based private equity firm Sycamore Partners, offers AUD1.10 a share. Bank of America Merrill Lynch is the lead debt financier in the deal.
It is the third offer the surfwear brand has received this year, and comes in well below the AUD3.30 per share offered by TPG Capital in February and subsequent offer of AUD1.45 per share in July that was then withdrawn.
Billabong said it will be "considering the proposal and its terms and will update the market as soon as possible."
The Gold Coast based company also lowered its full-year forecast for Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) to the range of AUD85-$92m in constant currency terms.
Including $29m in "significant items" - which include a revaluation of its stake in SurfStitch, bid-related and restructuring costs - EBITDA is seen in the range of $56-$63m, the company said.
This compares with earlier guidance for EBITDA in the range of $100-110m, up on the $84m Billabong booked in 2012.
The downgrade is based on declining same-store sales at the West 49 retail business in Canada, softness in wholesale forward orders for Dakine and Element, and weaker results for South America.
And in Europe there has been a "significant increase" in cancellations of winter product orders, coupled with lower-than-expected gross margins and store sales.
Under CEO Launa Inman, who was appointed in May, Billabong has embarked on a three-year restructuring.
But the company's shares fell 13.3% today to AUD0.85 over fears that the earnings downgrade, as well as the conditions attached to the takeover bid, could lead to the collapse of the deal.
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