Mitt Romney said to potentially bid for Billabong
Friday, 07 September 2012
US Presidential candidate Mitt Romney is the last to reveal his intentions to take the Billabong wave. Romney’s co-founded private equity fund, BAIN Capital, has become the last name to sound for the takeover race for Billabong, offering to
match rival TPG's 694 million dollars bid.Billabong announced Thursday that it had received an "indicative, non-binding and conditional proposal" from an unnamed party wanting to acquire it at "around 1.45 dollars per share", the same price offered by TPG. This is the second takeover offer that the surf wear company receives in six weeks. Billabong's advisers are Goldman, Sachs & Co. and law firm Allens."It's
great news for shareholders of Billabong because it adds pricing tension," said to Aussie portal ‘News.com.au’ Tim Montague-Jones, senior equity analyst at Morningstar. "The probability is quite high a higher offer could come through. A deal could get done."Billabong has signed a confidentiality agreement with the new bidder. Nevertheless, Bain had been previously signalled as a possible buyer and market sources confirmed earlier this week that the firm was behind the offer.
However, and according to Billabong, the offer did not reflect the company's true value, yet it was enough for the new bidder to be given access to Billabong's accounts for due diligence studies. The new contestant has given permission to look at Billabong’s numbers over a week after TPG began its own scrutiny of the books, Australian press published Friday.
"As is the case for TPG's proposal, the Billabong board does not believe this proposal reflects the fundamental value of Billabong in the context of a change of control transaction," Billabong said. The new proposal values the firm in 694.5 million Australian dollars (710.9 million dollars). "Billabong now considers that the interests of shareholders will be best served by a normal process to thoroughly evaluate whether a change of control offer, at a price and on terms that the board would recommend, can be secured," the company added.
An analyst quoted by ‘The Australian’, who wanted to remain anonymous, has criticised the company for agreeing to keep Bain's identity veiled, citing David Jones's decision in June to reveal a takeover approach from an unnamed bidder that was subsequently revealed to be a hoax. "What's the big secret? Everybody knows it's Bain, but investors are trading on the basis of incomplete information - they need to be told who the bidder is so they assess how much they might be willing to pay," said the analyst.
UBS analyst Ben Gilbert affirms that a private equity firm could pay as much as 2.03 dollars for Billabong and still make a 15 per cent annual return, but considered an offer of between 1.60 and 1.70 dollars more likely, published ‘The Australian’. Shares in Billabong Thursday rose as much as 11.5 cents, or 9 per cent, to a peak of 1.385 dollars. It’s worthy of note to remember that Billabong last month reported a 276 million dollars loss.
