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MAY 08, 2013 ARTICLE 5 OF 26
Billabong halts shares

Billabong won’t say if the trading halt is connected to the takeover offer. Photo: Glenn Hunt
CARRIE LAFRENZ

Surfwear and boardsports retailer ­Billabong International has been placed in a trading halt while it considers a?refreshed proposal relating to the 60¢-a-share takeover offer from New?York-based buyout firm Sycamore Partners and Billabong executive Paul Naude.

One source suggested a refreshed or lower bid is being examined by chairman Ian Pollard and the board.

Billabong and Sycamore had agreed to 10 days of exclusive talks after ­Sycamore’s lender, US-based Jefferies Group, engaged accounting firm PwC to assess the company’s quality of earnings before it would commit to finance the offer.

“The fact that PwC has come in to do a de-facto audit, this is very unusual as part of a public markets transaction. This is a bit telling,” the source said.

“The history of dealing with TPG and Bain .?.?. every time any one peeps under the skirt, they run away.

“If you look at what’s been occurring relative to other transactions, you’ve had a series of bidders over the last 12 months. The trail suggests there is some sort of adjustment on the cards.”

A Billabong spokesman declined to comment on whether the board was considering a fresh proposal.

“The board has entered a trading halt?as it is believed to be in the best interests of shareholders to do so. We will make an announcement at the appropriate time.”

Billabong entered a second stretch of exclusive talks with the consortium that has offered $287?million for the troubled retailer, which was set to expire on Wednesday. Sycamore has offered 60¢ a share, down from its initial offer of $1.10. Rival bidder VF Corp is believed to have offered roughly half of Sycamore’s ­second bid.

An M&A banker not involved in the deal said: “For a public deal, you rely on published accounts. To get another audit done, unless you have reservations about the accounts, you wouldn’t do that. It’s a lot of time and money.

“Negotiations can swing around a lot even in a day or two. At any given point, one side could walk away and the deal could be different. Having a trading halt while you finalise negotiations makes sense. This also gives a natural deadline to the buyer.”

Under Sycamore’s non-binding proposal, shareholders may elect to take cash. They also have the option of taking scrip in a new vehicle, although existing shareholders will account for a maximum of 24.9?per cent in the company, called NewCo.

Billabong founder and major shareholder Gordon Merchant and fellow director Colette Paull, who own a combined 16?per cent stake, are backing the takeover.

The trading halt will remain in place until Thursday when Billabong is expected to make an announcement. Billabong shares last traded at 45.5¢ each – an all-time low.

One source said while chief executive Launa Inman had been head of the business for a year, Billabong’s troubles were deeply ingrained. “A lot of the stuff she was dealing with was baked-in. While she has been there for a year .?.?. you need to cut her some slack.”