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.”
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)