TPG sets takeover sights on Billabong

Billabong International, Australia's biggest surfwear maker, has received a takeover approach from buyout firm TPG Capital valuing the company at A$765 million ($985 million).

The A$3 a share proposal from TPG was not certain and subject to due diligence, exclusivity and the company not proceeding with asset sales, Gold Coast, Australia-based Billabong said yesterday.

The shares surged as much as 64 per cent.

The TPG approach comes less than two months after the company started a review of its capital structure amid a slump in earnings and looming debt payments.

Billabong said it would sell a majority stake in its Nixon brand into a venture with Trilantic Capital Partners "in the absence of certainty" from TPG.

"Clearly the prospect of a takeover will support the share price, albeit details of TPG's approach are thin," Craig Woolford, an analyst at Citigroup, said in a note to clients.

Billabong's total debt stands at A$851 million, according to data compiled by Bloomberg.

Of that, A$484 million falls due next year and the remainder matures the following year, the data show.

The company, which owns 677 retail outlets around the world, will review its network and expects to close 100 to 150 stores.

Billabong will also cut around 400 jobs.

In the six months ended December 31, net income slumped 72 per cent to A$16.1 million, the company also said yesterday.

- Bloomberg