The board of Australian surfwear company Billabong has agreed to be taken over for $380 million.
The prospective buyer is a US company called Boardriders, the owner of Billabong’s competitor Quiksilver, as well as Roxy and DC Shoes.
A Billabong spokesperson confirmed there would be no job cuts in the near-future as a result of this deal.
“There will be no immediate impact on jobs.”
“Keep in mind, these are large global brands and any integration process will take a number of years,” the spokesperson told the ABC.
This deal is expected to be finalised by April at the earliest, but is subject to shareholder and regulatory approval.
Once that happens, Billabong will become a private company and be taken off the Australian share market.
Billabong’s need to ‘reduce debt’
Boardriders describes itself as “a global action sports and lifestyle company”, with products sold in more than 110 countries.
Further up this corporate structure, Boardriders is majority-owned by US investment management firm, Oaktree Capital Management.
Under this proposed deal, Boardriders will pay $1.00 for every ASX-listed share in Billabong — other than the 19 per cent stake which is owned by Oaktree.
This offer is 28 per cent higher than Billabong’s share price of 78 cents — its value on November 30, the day before Boardriders made its initial approach.
Billabong’s directors entered into a scheme of arrangement with Boardriders on Friday, and is urging its shareholders to vote in favour of the deal.
Back in August last year, Billabong posted a full-year loss of $77.1 million — more than triple its net loss from 2016.
Billabong reached this result after slashing $106.5 million off the value of its goodwill and secondary brands, including Von Zipper, RVCA, Xcel and Kustom.
“The Board considers that it will become necessary for Billabong to materially reduce debt if it is to continue with its current strategy which, given the company’s high debt levels is expected to require asset sales or a dilutive equity raising,” said Billabong’s chairman Ian Pollard.
“Having regard to these factors, and the fat that shareholders are being offered an attractive premium for their shares, the Board believes this offer is in the best interests of shareholders.”
The company also reaffirmed its full year guidance for 2018, and expects earnings to exceed the previous year.
Its forecast was pre-tax earnings of $51.1 million and $54 million, subject to “reasonable trading conditions” and currency markets remaining “relatively stable”.
Billabong shares traded 2.1 per cent higher at 98 cents at 12.20pm (AEDT).[“Source-abc”]