SYDNEY — Billabong International Ltd. has granted due diligence to a consortium led by its executive director and president of the Americas operations, Paul Naudé — and the market is divided as to its prospects.
Shortly after the Gold Coast, Queensland-based surfwear manufacturer announced that Naudé, private-equity group Sycamore Partners Management and Bank of America Merrill Lynch had made a 1.10 Australian dollar a share offer, or $1.14 a share offer, or $1.14 a share at current exchange, valuing the company at just less than 527 million Australian dollars, or $546 million — Billabong stated that it had reviewed the proposal in detail and that due diligence is expected to take up to six weeks.
“The board of Billabong reiterates that there is no guarantee that, following a period of due diligence by the consortium, an acceptable, binding proposal will be forthcoming,” said the statement to the Australian Securities Exchange. Unlike other ASX statements regarding the year’s previous Billabong offers, however, no mention was made of the 1.10 Australian dollar proposal undervaluing the company in a change-of-control context, a point that numerous analysts believe could be significant.
The Naudé-Sycamore proposal is the fifth takeover offer received by Billabong in 2012, after TPG Capital’s earlier bids of 3.00, 3.30 and 1.45 Australian dollars (or $3.12, $3.43 and $1.51), with the latter matched in September by Bain Capital. Both TPG Capital and Bain Capital later withdrew their offers after commencing due diligence, citing undisclosed “issues” with the company’s books.
As 2012 ended, Billabong’s stock was trading at 86 Australian cents, or 89 cents — well below the 1.10 offer.
In a Dec. 19 ASX statement covering the Naudé-Sycamore bid, Billabong announced its third profit downgrade in twelve months, prompting both Citibank and UBS to downgrade Billabong’s stock to neutral from buy and J.P. Morgan to cut the stock to underweight from neutral.
“It’s not encouraging at all,” said IG Markets analyst Stan Shamu. “Investors lose confidence quite quickly in this environment. Management knocked back a few takeover bids at higher prices, now they’re scrambling for 1.10. If this takeover doesn’t get through, I think it could get materially worse, just looking at some of the recent comments by brokers following the profit warning. It seems the stock would be trading at a much lower price if it wasn’t for the takeover offer underpinning the price.”
Deutsche Bank has predicted a 45 percent probability that a 1.10 deal will be successful. One Sydney broker, who declined to be named, put the odds at 50-50.
“Given the share price, the market is not proposing a huge probability of it going ahead,” said the broker. “But if Naudé and his syndicate actually come up with a firm bid, I personally think that the board will have to accept it, even though they knocked bids back from two private-equity companies before, and if you said no at 1.40 [$1.45], they’re going to look like absolute clowns. I think they’ve almost been put in a corner here. They haven’t said straight out it’s undervalued, and given that Naudé is heading up the bid, when you talk about due diligence, it’s hard to imagine he’s going to find something he doesn’t know. Having Naudé there is, I think, encouraging, because nobody knows the company like he does. He’s been there long enough. It’s going to take a long time to turn this business around. But I think the guys taking it over will make a lot of money.”
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews