Billabong shares surge with takeover bid

Published:  17 Feb at 6 PM

As reported by the BBC, Billabong shares have gone up by over 60% as the firm announced a restructuring scheme after TPG Capital offered a takeover bid from. Billabong’s shares surged as much as A$2.93 (up from A$1.79) at the Australia Securities Exchange.

The firm will sell off a stake of its Nixon brand, shut down unprofitable stores and slash jobs as part of its revamp plans. TPG had offered 765 million Australian dollars (A$3 per share) for a company takeover.

Billabong has confirmed the offer, saying that it was still subject to numerous conditions. The company announced that, with the lack of certainty, it has proceeded with the fractional sale of Nixon for the purpose of stabilising its balance sheets.

The company, which is famous for manufacturing surf wear, has struggled in amid a slowing worldwide demand. Last month, the firm cautioned that its earnings during the first half of 2012 may drop by as low as 25%.

Billabong's debt also continues to steadily increase, putting extra pressure on the balance sheets. The firm said it would use the revenue from its partial Nixon sale, which is expected to generate $A265.8 million, to lighten its debt burden.

The board is seeking a certain transaction to fix the company’s balance sheet issues, said Billabong, adding that it was vital to avoid the possible breach of any bank covenants.