Mixed news for surf wear retailer Billabong from North America where it has two deals on the go.
There was success with one deal to buy "progressive" clothing group, RVCA of California, but there’s a hitch in the earlier announced acquisition of West 49 in Canada.
It seems Billabong’s bid is no longer the only interest for West 49, with another possible buyer sniffing around.
Billabong said yesterday that it "notes the announcement by West 49 Inc. (“West 49”) dated 9 July 2010 in which it outlines it has received a proposal from Zumiez, Inc. to acquire West 49 for a price in excess of C$1.30 per share subject to a satisfactory due diligence review.
"On 30 June 2010, Billabong announced it had entered into a definitive acquisition agreement (“Agreement”) with West 49, pursuant to which Billabong would acquire West 49 for C$1.30 per share.
"The West 49 board has determined that the proposal from Zumiez “would reasonably be expected to lead to a superior proposal” and has notified Billabong that, subject to the terms of the Agreement, it intends to allow Zumiez to conduct due diligence to determine if its proposal can become a firm offer that is financially superior to the Billabong offer.
"The West 49 special committee and board as a whole have confirmed that they “continue to support the Billabong transaction and confirm their unanimous conclusion that the transaction with Billabong is in the best interests of the Company and is fair to the Company’s securityholders.
"At this time, Billabong does not expect there will be any impact to the existing transaction timetable. Billabong will continue to monitor the situation and will make further announcements as appropriate."
In a briefing on this deal (which values West 49 at around $C99 million ($A110.4 million), Billabong said the group had 138 stores (mostly in malls) across nine Canadian provinces.
The Californian acquisition was easier and Billabong’s statement said more about the nature of the "progressive apparel brand" and very little about the financials, except that its purchase will add about 2% to Billabong’s revenues and add nothing to 2011 earnings.
"The purchase price, which is not considered material, remains undisclosed," Billabong said.
"The asset acquisition agreement was subject to usual conditions precedent. Billabong and RVCA anticipated the conditions will be satisfied shortly," Billabong said.
Based on 2009 revenues of just over $1.6 billion, RCVA will add around $33 million new sales in 2011.
Billabong shares eased 7c to $9.03 yesterday.
