Billabong shares have jumped after the head of the troubled retailer’s US business announced that he was considering taking over the surfwear company.
Director and president of Billabong’s US business Paul Naude informed the board that he intended to stand temporarily aside from the roles, while he put forward a proposal for a leveraged buyout of the company.
Billabong said Mr Naude was seeking to hold discussions with potential financiers, both in debt and equity, to gain their support for the potential takeover.
It said that Mr Naude had acted independently in deciding to put forward a takeover bid.
“Mr Naude’s decision was not solicited by the board of Billabong and Mr Naude has confirmed that there is no agreement, arrangement or understanding with any member of the board or Billabong’s senior management team in regard to his proposal,” Billabong said.
Billabong shares surged 17.6 per cent to 87 cents after the announcement before closing at 82 cents.
IG Markets analyst Stan Shamu said that because Billabong had been underperforming for such a long time, even the talk of a takeover was enough to increase the share price.
“The only time it seems to go up these days is when it has some sort of takeover speculation,” he said.
“In the absence of a takeover bid, I think investors have largely lost hope in the company.
“It does seem like they are going through a tough time and they don’t really have a plan to get themselves out of the hole they’re in at the moment, so a takeover might be the best option.”
Billabong has had three takeover offers so far during 2012.
Private equity firm TPG made its first unsuccessful $850 million bid for Billabong in February and returned with a lower offer of $694.5 million, or $1.45 a share, in July.
Billabong said that the second TPG offer undervalued the company, and three months later the private equity firm withdrew the bid during the due diligence phase.
A second private firm, believed to be Bain Capital, in September matched the $694.5 million offer but withdrew only weeks later during due diligence.
The surfwear retailer posted a $275.6 million loss for the year to June 30, a big turnaround from the $119.1 million net profit Billabong made in 2010/11.
Billabong on Monday repeated its commitment to its planned transformation strategy, which includes store closures, reduced product lines and expansion of its online business.
Mr Naude was appointed president of Billabong’s American operations in September 1998, and established Billabong USA as a wholly owned activity in North America.
He has been involved in the surfing industry since 1973 and also has extensive experience managing clothing brands.
Billabong said there was no guarantee that Mr Naude’s offer would justify the granting of due diligence or that he would even be able to make a takeover bid.
During Mr Naude’s absence, chief financial offer for the Americas Peter Bryant and group executive retail Colin Haggerty would carry out his duties.
