MELBOURNE–Australian surf and snow wear maker and retailer Billabong International Ltd. said Monday it has rejected a 765.3 million Australian dollar (US$821.4 million) takeover bid by U.S. private-equity firm TPG Capital, saying it didn't reflect the value of the company.
"The board has concluded that the indicative price of A$3.00 per share proposed by TPG does not reflect the fundamental value of the company in the context of a change of control," Billabong said in a statement.
The Australian company, which owns and sells brands including its namesake Billabong, Von Zipper and Tigerlily, has been hurt by earnings downgrades as sales have slowed in the face of poor weather, cautious consumers and global economic jitters.
The global surf-wear and snow-wear wholesaler and retailer also said its major shareholder, Gordon Merchant, who holds a 13% interest, had advised that he wouldn't accept TPG's offer and that the bid price was "significantly" below the target's underlying value.
Billabong said discussions aimed at giving the private-equity firm an opportunity to increase its offer price were continuing. A TPG spokeswoman said the company didn't want to comment at this stage.
Billabong's Board Crashes TPG's Wave
TPG made a bid for Billabong earlier this month on condition the company wouldn't sell down its interest in any of its assets.
Still, Billabong proceeded with a partial sale of its Nixon watch-and-accessories brand following a capital-structure review. It expects to receive about US$285 million from the sell-down, which it plans to use to repay debt and avert a potential breach of its bank covenants.
TPG later renewed its bid and loosened its conditions to allow for the Nixon deal.
Billabong shares, which traded at an all-time low of A$1.70 in December, jumped 46% on the day it resumed trading following the early-February takeover bid, and have climbed since. At 11:55 a.m. local time Monday, Billabong's shares were up 2% at A$2.97.
"Regardless of the outcome of the discussions, the board believes Billabong has an attractive independent future," the company said.
"As a result of the strategic capital structure review, the company is now on a much more secure footing and is well-positioned to grow and create value for shareholders should the retail sector and discretionary spending rebound from their current lows," it added.
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