TPG’s financial adviser, Macquarie Group, approached a Billabong substantial shareholder, Perennial, on Thursday about selling its 8 per cent stake in the company.
The reaction was positive. In market terminology, Perennial decided to “come over the wall” and sell its shares through a share option agreement with TPG.
Once it came over the wall, it could not trade its stock and it could not tell anyone it had made the agreement as it possessed inside information.
There is no suggestion here that Perennial did not act within the law.
Macquarie then approached another Billabong substantial shareholder, Colonial First State, after the market closed on Friday to secure its 11.7 per cent shareholding. Colonial signed an option agreement with TPG on Monday night. High-level elements of TPG’s pre-bid agreement were revealed yesterday by Billbabong in a statement to the stock exchange.
It covers a total of 12.5 per cent of the issued capital even though the combined shareholding of Perennial and Colonial is about 19.7 per cent.
The full details of the option agreement will be known today when TPG releases a substantial shareholder agreement covering the 12.5 per cent holding. TPG’s lawyer, Baden Furphy of Freehills, was careful in how he structured the option agreement to ensure that TPG would be able to enjoy a share of any upside should an auction develop and someone outbid its $1.45 proposal.
Furphy has also made sure that the option agreement does not preclude the shares being voted in favour of a scheme of arrangement should the board recommend the TPG offer.
Billabong’s adviser, Goldman Sachs, will likely use its best efforts to ensure all interested parties are aware that Billabong is in play and likely to be sold. It will also be talking to all the other institutional shareholders.
Other big shareholders are Franklin Templeton (7 per cent), Macquarie Investment Management (5?per cent), Baillie Gifford (3.3 per cent), Maple-Brown Abbott (2.6 per cent), INVESCO Australia (2.6 per cent) and Fidelity (2.4 per cent).
BBG Price at posting:
83.5¢ Sentiment: LT Buy Disclosure: Held
