Billabong shares plunge as takeover talks collapse

Surfer using a Billabong board Billabong has seen its shares fall over the past few months amid uncertainty over its future

Related Stories

Shares in Australian surfwear maker Billabong have plunged after the firm said that takeover talks with two potential bidders had collapsed.

Its shares fell as much as 58% to a record low of A$0.19 on the Australian Stock Exchange on Tuesday.

Billabong had rejected a takeover bid valued at A$3.50 per share last year, but has struggled to restructure its business.

It said it was discussing refinancing options with the two bidders.

The two bidders are consortiums, one led by its former US head Paul Naude along with private equity firm Sycamore Partners, the other led by Altamont Capital Partners.

Billabong said it was also discussing the possibility of asset sales with the two, and proceeds from any such sales would be used to repay its existing debt.

"This is the worst fear that we had," said Evan Lucas, a strategist with IG markets.

"They are now in the situation where they are going to have to be completely refinancing; that will obviously dilute their share price and dilute any form of debt that they've already got, which is the concern they've had the entire time."

The firm also lowered its profit forecast for the financial year to 30 June.

It now expects to make a profit of A$67m-A$74m ($65m-$71m; £42m-£47m) for the period, down from its earlier projection of a profit of A$74m-A$81m amid "weaker trading in Australia" and "weak" sales in Europe.

"It certainly does not look like a great place to be and there'll be a lot of questions in regards to how their reporting was done considering how bad the company looks," said Mr Lucas.

Billabong has already sold assets, closed stores and replaced its chief executive in an attempt to revive the business.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Baby being handed overFraught world

    The legal confusion over UK surrogate births


  • Bad resultsBlame game

    The best excuses to use when exam results don't make the grade


  • Welsh flagDragon's den

    Why Wales will make its own mind up on independence


  • BKS IyengarFlexible guru

    The man who helped bring yoga to the West


  • Police respond to a shooting in Santa MonicaTrigger decision

    What really happens before a police officer fires their gun?


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.