Struggling surfwear retailer Billabong has received its second takeover offer in six weeks, with its latest suitor matching TPG’s $1.45-a-share bid.
However, analysts don’t expect a higher bid from either party.
While Billabong has not named the latest bidder, private equity groups Bain Capital and KKR have been reported as the possible second party.
The second offer values Billabong at $694.5 million and comes six weeks after an equally-priced offer was made by private equity firm TPG, which is carrying out due diligence on the retailer.
Billabong says both offers fail to reflect the fundamental value of the company, but it will allow the new suitor to conduct due diligence.
It will also begin a formal process to evaluate whether a higher takeover offer could be secured.
“The board of Billabong now considers that the interests of shareholders will be best served by a formal process to thoroughly evaluate whether a change of control offer, at a price and on terms that the board would recommend, can be secured,” the company said in a statement.
That process was expected to take several weeks, it said.
Billabong shares closed 9.5 cents higher at $1.35, after reaching an intraday high of $1.38, well below the $1.45-a-share takeover bid.
Ten months ago Billabong shares were traded at $3.54.
Billabong made a $275.6 million loss in the year to June 30, down from a $119.1 million net profit in the previous financial year.
Chief executive Laura Inman recently unveiled a transformation plan that included closing stores, cutting product lines, expanding its online business and globalising the supply chain.
City Index chief market analyst Peter Esho said the second offer was surprising considering Billabong’s recent loss.
He said there was nothing in the company’s transformation plan that led him to believe that the retailer’s fortunes would be dramatically turned around.
It would be surprising if Billabong could get a much better offer from either bidder, Mr Esho said.
“It’s very unlikely they’ll get a $2 takeover bid,” he said.
“For the price to get much higher they must have generous expectations around earnings.”
