Cash's up for Billabong founder as price wave builds

SYDNEY - Hey dude - let's grab a ride on that wave of cash - and that's what the founder of Australian surfwear group Billabong International and a fellow director did yesterday by offloading a 6.7 per cent stake in the company for about A$206 million ($230.4 million).

A strong market was being seen as the reason behind the sale of 13.81 million shares by founder Gordon Merchant and Colette Paull.

Although Billabong did not specify the price, a source said the shares were sold at A$14.95 each to Citigroup, which was expected to place them with institutions.

Billabong, founded in 1973 and listed on the Australian Stock Exchange in 2000, sells its surf and board sports apparel at specialty sport stores as well as self-branded stores in more than 90 countries around the world.

It also sponsors surfers, skaters and pro surfing tournaments in Australia, South Africa and Spain.

Merchant was responsible for the company's name and also for the distinctive wave logo that is still in use.

"I am not unduly worried about the sale and we are comfortable with the stock," said Mark Daniels, director of equities with Aberdeen Asset Management.

"Everybody likes to sell at strength. I don't think the owners are any different to fund managers."

Billabong chairman Ted Kunkel said the sale made no difference to the operations of Billabong or to the company's forecast of 15 per cent earnings per share growth in the financial year ending June 30, 2006.

Merchant has agreed to place the remainder of his holding in escrow for a minimum of 12 months.

Billabong, whose brands include the Billabong and Element clothing ranges and Von Zipper eyewear, reported a 15 per cent rise in first-half profit last month and forecast earnings growth of 15 per cent in fiscal 2006, underpinned by strong US sales.

Founders of some Australian companies are cashing in their shares, riding a boom in the sharemarket, which has jumped 58 per cent in the past three years.

Last month, founders of Excel Coal sold a combined 7.4 per cent stake in the company for A$54 million, while the executive chairman of Oakton, a small information technology company, sold a 14.5 per cent stake.

Fund managers expect management sell-downs to pick up steam, with investment and advisory company Babcock & Brown tipped to be the next in line.

- REUTERS