Billabong considers $527m takeover

Surfwear retailer Billabong is considering a $527 million takeover offer from one of its former executives, and has downgraded its full-year earnings guidance.

Former board member Paul Naude has offered $1.10 for each Billabong share, as part of a consortium made up of New-York based Sycamore Partners and Bank of America Merrill Lynch.

It is the fifth takeover offer for the troubled retailer in 2012.

Billabong said it was considering the offer, which carries many conditions and is subject to completion of due diligence, despite progress being made in the company's transformation plans.

"The board supports the transformation strategy, which has already delivered some early improvements in operations and in managing costs," chairman Ian Pollard said in a statement on Wednesday.

"However, it will continue to assess the current indicative, non-binding and conditional proposal as well as other matters that may be outside of its control as it seeks to restore the fortunes of the company."

However, Mr Naude's takeover offer is at risk of being withdrawn, after details of his proposal were reported by media before the company informed the market of its details.

"The proposal also states that if confidentiality in the proposal is lost, for any reason, the proposal is withdrawn with immediate effect," Billabong said.

The company said it would check with Mr Naude and his financial partners if they intended to withdraw the proposal given the loss of confidentiality.

"If the proposal is not withdrawn, the Billabong board will proceed to consider the proposal and its terms, and will update the market in due course," the company said.

Billabong has also reduced its forecast for earnings in the 2012/13 financial year because of weaker-than-expected sales in October and November.

The company now expects its full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in a range of $85 million to $92 million, down from its previous forecast of $100 million to $110 million.

Statutory EBITDA for the year is expected to be between $53 million and $63 million, due to the costs of the company's transformation and revaluation of one of its businesses.

The company could also incur impairments on the value of its assets during the year, it said.

A review was to be conducted at the end of December of all of Billabong's assets because of the sharp fall in the company's market value, it said.

Billabong shares have fallen by about 66 per cent in the last 12 months.

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