Billabong shares swelled by more than eight per cent amid speculation that a fresh takeover offer could trigger more bids for the troubled retailer.
Billabong International received a second takeover offer from private equity giant TPG Capital on Monday to buy all its shares for $3 each following the surfwear retailer’s announcement of a major restructure plan on Friday.
The offer sent shares in Billabong higher, with the stock closing 21 points or eight per cent higher at $2.83.
Billabong issued a statement saying the non-binding proposal was subject to due diligence, finance and conditional on a number of other matters, but it does not preclude the Nixon transaction announced on Friday 17 February, 2012.
“The board of Billabong will consider the proposal and advise shareholders of its views in due course,” Billabong said in a statement.
Analysts said there could be more support for the stock if another takeover bid emerged, but uncertainty remains about whether cyclical, seasonal or structural factors are responsible for the ongoing decline in the company’s earnings.
“The key issue is engaging the company and being able to actually go down and sit down and actually have a chat and get due diligence done,” an analyst who did not wish to be named said. “So the question is what price would allow them to sit down.”
Expectations for earnings over the next few years would determine how high the takeover price would go.
“A competitive bidding process will ensure a higher price but you need to have some certainty that the bid is going to be fully considered.”
Billabong revealed last Thursday that it had received a $3 a share offer from TPG, valuing the retailer at $776 million.
On Friday when it reported a massive slump in first half profit, Billabong said the non-binding indicative offer was never certain to go ahead as it was subject to due diligence, finance and Billabong not reducing its stakes in any of its brands.
At the same time, Billabong announced it was selling a chunk of its Nixon Inc accessories business as well as closing 150 stores worldwide and shedding 400 jobs as part of a major restructure.
However it said it would leave the door open to takeover offers.
