VF Corp Issues Proposal to Buy Billabong

Andrew Klips |

VF Corporation (VFC) and Altamont Capital Partners said on Monday that they have presented an offer to acquire Australia’s Billabong International Ltd. For A$526.8 million ($556 million U.S.), or A$1.10 per share ($1.16 U.S.).  Greensboro, North Carolina-based VF Corp., which has name brands like The North Face, Timberland, Vans, Lee and Wrangler in its portfolio, is looking to expand its sports product line with the purchase of Australia’s laragest surf brand.  Altamont’s motivation seems to be to acquire Billabong’s other assets and brands, which include niche lines like Element, Von Zipper and Tigerlilly.

The offer made by the Altamont/VF consortium matches an offer in December by New York-based private equity firm Sycamore Partners and Paul Naude, the former head of the Americas at Billabong.  That group is currently undergoing its due diligence process.  Altamont and VF have been granted time to complete their due diligence as well.

Neither of the offers are binding at this point.

The process is expected to take about six weeks, according to a statement from Billabong to the Australian Stock Exchange, where the company trades under the ticker “BBG.”  Shares of BBG closed at 84.5 Australian cents today.

After the two groups complete their due diligence, Billabong said that it will be looking for a bid and terms “that the board would recommend.”

The new proposals from the two consortiums follow a string of other buyout offers that went by the wayside.  Private equity firms TPG Capital and Bain Capital both made attempts to buy Billabong last year, including an offer from TPG at A$3.00 per share early in the year that was lowered to A$1.45 per share in July as earnings at Billabong deteriorated.  The deals faced headwinds of Billabong saying the offers undervalued the company and all offers were withdrawn as TGP and Bain completed their due diligence.  Both of those companies seem to have lost interest at this point.

The embattled Australian company warned on December 18 that its annual earnings could be 15 percent below their previous estimate.  In 2012, Billabong eliminated hundreds of jobs and sold half of its interest in Nixon Inc. watches and accessories as it looks to turn the company around.

In May, Billabong appointed former Target (TGT) managing director Launa Inman as chief executive officer.  Inman detailed a four-year restructuring plan in August that included minimizing the business and leveraging key assets as well as bolstering e-commerce business.  Last week, Peter Meyers, a man with a pedigree involving refinancing, M&A activity and IPO’s as group CFO, replacing the freshly-resigned Craig White.

Shares of VFC closed Friday at $149.00 on Friday and advanced 18 percent across 2012.

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Companies

Symbol Name Price Change % Volume
LACO LACO n/a n/a n/a 0
TGT Target Corporation 67.22 -1.55 -2.25 6,902,755
VFC V.F. Corporation 55.82 -1.13 -1.98 2,627,090

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