Billabong International Ltd. (ASE: BBG), the troubled retail chain best known for sportswear and beach attire, has opted to sell off some units separately, after talks with private equity firms to buy the company outright appear to have stalled.
Billabong is reportedly looking to sell three segments — DaKine Hawaii Inc., RVCA, and West49 — as a means of raising enough capital to repay the company's $350 million syndicated debt facility. The planned auctions are believed to be a last ditch effort on the part of the Australian franchise after it became apparent to potential suitors that the continuing deterioration of the business meant buying the entire company would be increasingly difficult.
Reeling after it rejected a $903.5 million bid from private equity firm TPG Capital Management in February 2012, Billabong is attempting to maintain discussions with current suitors Sycamore Partners Management and Altamont Capital Partners.
“The value has plummeted,” says Antony Karabus, president of SD Retail Consulting, an advisory unit of Hilco Trading LLC, in the June 2013 issue of Mergers & Acquisitions.
Billabong's shares closed at $0.90 on Jan. 11, when Altamont submitted an offer for $556 million. By April, Billabong received a reduced offer from Sycamore of $284 million. As of June 7, the company is trading at $0.21.
However, Billabong can once again have its time in the sun, Karabus adds.
“I think a private equity buyer with a laser focus can turn it around. Billabong, at its heart, has a nice brand image for surfers, beachwear and broad shorts, so I don't think it's a lost cause. It has to differentiate its position—Billabong had a wonderful brand but they lost that image.”
For more, see “Companies For Sale."