Billabong shares closed a little higher overnight, following confirmation that Boardriders Inc – formerly Quicksilver – has entered an agreement to purchase the Australian surf wear business. The deal values Billabong at around $155 million.
Billabong shares are listed on the Australian stock exchange and closed 2.6% higher at A$0.98. That’s one of the highest levels for the stock since the first quarter of 2017.
Deal seen as a lifeline to struggling Billabong
The sale comes as Billabong has made a profit only once over the past five years. In 2013 the Australian surf wear brand wrote off the value of a number of its eight different brands.
Quicksilver was also founded in Australia. However, it declared bankruptcy in 2015 and became a private company under the name Boardriders Inc. and is privately owned by Oaktree Capital Management in the US. Oaktree Capital is also already a shareholder in Billabong.
“Billabong's brands’ great strength is their authenticity and heritage,” said Neil Fiske, Billabong’s CEO.
“I’m confident those qualities will not simply be protected but enhanced by a new organisation that will have the scale and financial security to continue to support and build them as we enter into a new and dynamic retail environment,” Fiske added.
Billabong chairman Ian Pollard said: “While Billabong has made significant operational progress in recent years,… Billabong shareholders face ongoing risks and uncertainties associated with the business.”
Billabong also confirmed it’s previous 2018 outlook for the firm and said it expects Billabong’s earnings to exceed that of 2017.
Investors anticipate shareholder support for deal
The Billabong board unanimously voted in favour of the deal, which is now subject to shareholder and regulatory approvals.
Billabong shares moved higher on the news, suggesting investors are confident shareholders will approve the buyout.
If the deal is finalised as expected, the combined Boardriders and Billabong business will be in control of some 630 stores in 28 different countries.