Business news : TPG Withdraws Billabong Takeover Bid

TPG Capital on Friday walked away from its Australian 695 million dollar ($714 million) takeover offer for Billabong International. Billabong did not explain why TPG dropped the offer, but had said in a stock exchange announcement last week that: ‘‘As part of its due diligence investigations, TPG and its advisers have expressed concerns in relation to some issues.’’

Shares in the surfwear company fell as much as 19 percent in Sydney trading on Friday on the news of the dropped bid.

In a statement on Friday, Billabong said that TPG's A$1.45 cash per share offer "has been withdrawn by TPG and discussions have ceased. As a result, the formal process to evaluate change of control proposals that was announced on Thursday, 6 September 2012 has concluded."

Billabong said it continues to implement its Transformation Strategy detailed on August 27. This strategy, under CEO Launa Inman, provides a clear pathway to unlocking the inherent value within the company, it added.

“The Board is pleased with the progress around implementation of the Transformation Strategy and structural organisational change being driven by CEO Launa Inman,” Billabong Chairman Ted Kunkel said “Acting in the best interests of shareholders has meant that we have remained focused on implementing the Transformation Strategy throughout the formal process.”

The company also reiterated the financial outlook as set out in the full year results presentation announced on August 27. The company expects the current challenging retail trading conditions to continue during FY13.

Assuming no further deterioration in these conditions, FY13 EBITDA is expected to be in the range of $100-$110m in constant currency terms. This compares to pro-forma FY12 EBITDA of $84m, excluding 100% of Nixon and significant and  exceptional items.

The result is expected to be driven by:
‒ The benefits from the previously announced Strategic Capital Structure Review
‒ The additional benefits to be realised under the Transformation Strategy
‒ Recognition of Billabong’s share of after tax Nixon JV profits

Based on first quarter performance, Billabong is on track to achieve this guidance.

Billabong is targeting EBITDA in FY16 of >2.5x FY12 pro-forma EBITDA of $84m through a range of initiatives, including simplifying the business, investing in key brands, building the global ecommerce platform and the globalisation and integration of the supply chain.

The Board believes Billabong has an attractive independent future as a leading global boardsports wholesaler and retailer. Billabong has established and grown a portfolio of unique brands, including Billabong, RVCA, Element and DaKine among many others, which are internationally recognized and globally distributed.

( SportsOneSource Media )

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