Australian surf-wear brand Billabong has sealed a deal to be acquired by US rival Boardriders in a deal worth Aus$197.7m (€129m/$155m).
Boardriders owns the Quiksilver brand while Billabong operates RVCA, Element and Von Zipper among a total of eight brands.
Billabong has only posted a profit once in the past five years. In 2013, the company wrote off the value of many of its assets.
“While Billabong has made significant operational progress in recent years, the board is also mindful of the fact that, in the absence of the scheme, Billabong shareholders face ongoing risks and uncertainties associated with the business,” Billabong chairman Ian Pollard said.
“These include risks relating to the state of the global retail market as it affects both Billabong and its wholesale customers; the operations and project risks associated with the execution of Billabong’s strategy; and risks relating to the refinancing of its debt.
“In particular, the board considers that it will become necessary for Billabong to materially reduce debt if it is to continue with its current strategy which, given the company’s existing high debt levels is expected to require asset sales or a dilutive equity raising. Having regard to these factors, and the fact that shareholders are being offered an attractive premium for their shares, the board believes this offer is in the best interests of shareholders.”
Billabong chief executive Neil Fiske added: “Billabong's brands’ great strength is their authenticity and heritage. 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.”
US private equity vehicle Oaktree Capital Management has a 19-per-cent stake in Billabong and is one of its two senior lenders. Funds managed by Oaktree also have a majority interest in Boardriders.