SYDNEY — TPG Capital walked away from its bid for Billabong International Ltd., and the Australian surfwear company’s shares paid the price.
Billabong said Friday morning that TPG’s proposal has been formally withdrawn and that discussions have ceased. This comes a week after the troubled Gold Coast-based manufacturer and retailer quelled rumors that the private-equity firm’s 695 million Australian dollar, or $713 million at current exchange, buyout offer was about to fall over due to concerns over undisclosed “issues.”
TPG Capital declined comment but released the following statement on Friday morning: “Board and management were very constructive throughout the process and laid out a credible performance-improvement plan, but ultimately TPG has decided to withdraw from the process.”
Billabong’s shares in Sydney plunged as much as 18 percent in morning trading after the announcement. They recuperated in the afternoon but still closed 16.9 percent lower, at 83.5 Australian cents, or 86 cents, a record-low closing.
TPG’s is the second Billabong buyout offer to be withdrawn in a month, after Bain Capital made a matching bid for the company in early September, only to pull out after just a two weeks of due diligence.
Billabong said Friday its “Transformation Strategy” is providing “a clear pathway to unlocking the inherent value within the company.” The firm claims to be on track to reach the full-year 2013 financial targets it set in August.
On Oct. 8, the company announced the appointment of a new chairman, former Just Group chairman Ian Pollard. On Wednesday, however, Pollard told local media that his Billabong appointment was solely contingent on the TPG sale not going through.
Tim Montague-Jones, a senior equities analyst with Morningstar, expressed frustration with the dropped bid.
“We’ve had Bain Capital walk away after two weeks of due diligence, now TPG, after six weeks of due diligence, due to ‘issues,’ and the company hasn’t disclosed what these issues are,” he said. “After going through the books, TPG has obviously discovered something, but obviously these companies have signed confidentiality agreements. What they’ve uncovered must be a material issue for them to change their opinion so drastically on making a bid on public information and walking away on private information.”