Billabong: TPG Capital makes fresh takeover bid

Surfer using a Billabong board Billabong has seen sales of its products decline in some of its key markets

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Private equity firm TPG Capital has made a fresh takeover bid for Billabong just months after the Australian surfwear maker rejected its earlier offer.

TPG has offered 695m Australian dollars ($713m; £460m) or A$1.45 per share, a 32% premium to the closing price on Monday, to takeover the firm.

In February, TPG had offered of A$3.30 per share or A$841m for the firm.

However, Billabong had rejected the offer calling it too low.

Two of Billabong's largest shareholders, Colonial First State Investment and Perennial Value Management, have agreed to sell about 12.5% of Billabong shares to TPG, the surfwear maker said in statement.

Billabong shares jumped as much as 24% to A$1.36 on the Australian Securities Exchange after the bid.

Likely to succeed?

Start Quote

The deal in its current form looks like it could get over the line. It is more comprehensive and the valuation multiple is fair”

End Quote Peter Esho City Index

Billabong has seen its fortunes dwindle in recent times amid falling demand for its products from some of its key markets.

It has cut its earnings forecast and lost almost 80% of its value in the past year.

Last month, in a bid to reduce its debt and raise fresh capital, the embattled firm launched a rights issue priced at a 44% discount to its closing price of A$1.83 on 20 June.

The move had come under severe criticism from shareholders and analysts, not least because it valued the firm much lower than what TPG had offered to pay.

Analysts said that given the problems the firm had faced, the fresh bid from TPG was likely to be successful.

"The deal in its current form looks like it could get over the line," said Peter Esho an analysts with City Index in Sydney.

"It is more comprehensive and the valuation multiple is fair."

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