Billabong has received a non-binding proposal from Boardriders Inc., parent to Quiksilver brand, to acquire the company for $1 per share.
The funds are managed by Oaktree Capital Management, which owns a majority interest in Boardriders Inc., and already holds 19% of the shares in Billabong as one of its two senior lenders.
The proposal is subject to a number of conditions, including allowing for due diligence up to Boardriders satisfaction. The Billabong board and the company’s advisers agreed to grant due diligence access to Boardriders, as of today — a process that will likely take multiple weeks. Billabong has noted that the process does not ensure a formal offer will be made.
Centerbridge Partners is the second senior lender for Billabong, while company founder and board director Gordon Merchant also holds 10.46% of shares, according to Australian Financial Review.
Industry insiders say they “can’t imagine” that Merchant, who declined a bid for $3.30 per share back in 2012, will be happy to accept the latest bid from Boardriders.
Billabong, which has been undergoing a multi-year restructuring, saw losses upwards of $23 million last year. Even after unloading brands Sector 9 and Tigerlily, the company remains vulnerable to a takeover from historic arch-rival Quiksilver.
Quiksilver has been working on its own rebuilding strategy over the past few years,which resulted, among other things, in return to profitability for the first time in years and a corporate name change to Boardriders Inc. — a decision many have speculated was in preparation for the proposed acquisition of Billabong.
The current proposal is subject to numerous conditions. In addition to due diligence, Boardriders must show it has secured committed financing, and the deal must also receive unanimous recommendation from the Billabong board, along with entry into a definitive scheme implementation agreement between the parties.
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