Billabong board gives nod to Quiksilver parent’s bid
Quiksilver’s parent company Boardriders has agreed to acquire rival Billabong International, after agreeing to acquire all of the shares in the company valued at $1.00 per share via a scheme of arrangement.
The approximately $198 million deal, if approved by shareholders, will combine two of the largest global active sports brands.
In a statement, Billabong said the scheme consideration of $1.00 per share represents an implied enterprise value of $380 million.
“While Billabong has made significant operational progress in recent years, the board is also mindful of the fact that, in the absence of the scheme, Billabong shareholders face ongoing risks and uncertainties associated with the business,” said Billabong chairman, Ian Pollard.
“These include risks relating to the state of the global retail market as it affects both Billabong and its wholesale customers; the operations and project risks associated with the execution of Billabong’s strategy; and risks relating to the refinancing of its debt.”
Pollard said it it will become necessary for the retailer to materially reduce debt if it is to continue with the current strategy, which he said given the company’s already high debt levels, is expected to require asset sales or a dilutive equity raising.
“Having regard to these factors, and the fact that shareholders are being offered an attractive premium for their shares, the board believes this offer is in the best interests of shareholders,” he said.
Boardriders is controlled by funds managed by Oaktree Capital Management, which holds 19 per cent of the shares in Billabong and one of two senior lenders to the retailer.
Centerbridge Partners currently holds approximately 19.2 per cent of the shares in Billabong and said it intends to vote in favour of the deal.
Gordon Merchant, a director of Billabong owns 12.8 per cent of the company’s shares and also intends to vote in favour of the scheme.
Billabong also offered a trading update, expecting the company’s EBITDA to be in the range of $51.1 million and $54 million, with the increasing proportion of earnings expected to be in the Americas and Europe.
“Billabong’s brands’ great strength is their authenticity and heritage,” said Billabong CEO, Neil Fiske.
“I’m confident those qualities will not simply be protected but enhanced by a new organisation that will have the scale and financial security to continue to support and build them as we enter into a new and dynamic retail environment.”
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