SYDNEY — Billabong International Ltd has confirmed that TPG Capital is still in talks to acquire the company following speculation that a proposed $695 million Australian buyout offer ($711 million at current exchange) was about to be withdrawn.
According to a statement released to the Australian Securities Exchange late Thursday, several hours after Billabong issued a trading halt, “Billabong advises that TPG has confirmed that it has not withdrawn from the sale process. As part of its due diligence investigations, TPG and its advisers have expressed concerns in relation to some issues, however discussions in relation to those matters are continuing.
“Billabong has stressed in each of its previous announcements in relation to the sale process that there is no guarantee that any transaction will eventuate out of the process or that the Board will recommend any proposal, and that continues to be the case”.
On Thursday afternoon, Billabong’s shares plunged 30 cents or 23 percent to a three month low of $1.015 Australian ($1.038) after an Australian media report quoted sources close to TPG Capital claiming that the U.S. private equity company’s $1.45 Australian a share offer ($1.48) was about to fall over. It was TPG Capital’s second bid for Billabong this year, following an initial 3.30 Australian dollar a share offer ($3.53 at February exchange rates), which was rejected by Billabong. TPG began due diligence in August.
In September, rival US private equity firm Bain Capital made a matching $1.45 Australian bid for Billabong, but pulled out after just a fortnight of due diligence, prompting a 7.3 per cent or $1.34 Australian drop in the company’s share price.
Both Billabong and TPG declined comment, however a spokesperson for Billabong confirmed that trading was expected to resume Friday morning.