Billabong, Unexcited, Yet Opens Books to TPG

Troubled Australian surfwear retailer Billabong International, unexcited over the second takeover bid by U.S.-based private equity firm TPG Inc. of $695 million, has nevertheless decided to still open its books to the latter.

TPG has been given the opportunity to perform non-exclusive due diligence "in order to reduce the conditionality of its proposal and to improve its understanding and valuation'' of Billabong International, the company said in an announcement to the Australian Securities Exchange on Friday.

The consent to open its books, however, does not automatically mean that a transaction would be agreed immediately after, the Australian surfwear company said.

"In fact, the board of Billabong does not believe that the proposal reflects the fundamental value of Billabong in the context of a change-of-control transaction," the company said in its statement.

But the company is hoping that TPG's indicative offer could still be raised.

"TPG's indicative price of $1.45 per share is based solely on available public information and may be refined with the benefit of due diligence,'' Billabong International said in its ASX statement.

Early this week, TPG presented a second takeover bid after Gordon Merchant, founder and biggest shareholder of the troubled surfwear retailer, rejected its first bid five months ago. Mr Gordon claimed the first bid did not give justice to the company's underlying value.

However, instead of giving a sweetened second offer, TPG's second bid appeared to have soured. Its first bid was to acquire Billabong International at $3.30 per share, or a total of $850 million.

Its present offer stands at $1.45 a share.

The due diligence process will take several weeks to complete.