Billabong International Limited is a surf company, primarily a clothing
retailer that also produces accessories, like watches and backpacks and
skateboard and snowboard products under other brand-names. Founded in 1973 by
Gordon and Rena Merchant, the company first traded on the Australian
Securities Exchange on 11 August 2000. The name "billabong" is derived from the
Wiradjuri word "bilabaŋ" that refers to a "creek that runs only during the rainy
season". As of September 2013, Von Zipper, and Element are two of the
prominent brands that Billabong owns. Honolua Surf Company, Kustom, Palmers
Surf, Xcel, Tigerlily, Sector 9 and RVCA are the company's other brands.
From late 2012 onwards, following the company's collapse in the period since
2008, Billabong International has been the subject of a protracted bidding
process in which the company's former United States chief Paul Naude has been
a participant. History
= Early History= Billabong was founded in the Gold Coast,
Queensland, Australia in 1973 by Gordon Merchant. At first, he designed and
created board shorts at his home and then sold them to local surf shops.
Surfers soon realized the durability of Merchant's shorts that was the result of
his triple-stitching technique. Merchant understood that his company needed to
expand to achieve success, so Billabong started to sponsor contests, which
increased the public's awareness of Merchant's products and the company
expanded. By the 1980s, Billabong board shorts were present throughout
Australia. Based upon his success in Australia,
Merchant decided to export Billabong's products and, by the late 1980s,
Merchant's board shorts were available in other countries, including New
Zealand, Japan, and South Africa. In the 1990s, the surf industry as a whole grew
significantly and Billabong was a part of this growth process. The company was
first traded on the Australian Securities Exchange in mid-2000, which
provided the company with the funds to further expand and acquire other
companies. = Acquisitions=
As the company developed further, it acquired new brands and retail outlets
to move beyond the wholesale business, and the first decade of the 21st century
was a particularly active period of expansion for Billabong. Von Zipper, an
eyewear brand, was acquired in early 2001 and the acquisition of
skateboarding apparel and hard good brand Element was announced in July
2001. The acquisition of the Kustom surf shoe
brand, as part of Billabong's purchase of the Australian Gold Coast-based
Palmers Surf company, was disclosed in September 2004. The following year in
December, an official press release was published to announce the acquisition of
Nixon Inc., a watch and accessories brand in the board sports market.
The acquisition of wetsuit and technical watersport accessories brand Xcel became
effective on 1 September 2007, and Jodhi Meares's Tigerlily brand was acquired
shortly thereafter in December of the same year. The Tigerlily decision
represented the first time that Billabong had acquired a brand focused
exclusively on the 'girls' market, and the intention of management was to
position the new addition so that it complemented the company's own
'Billabongs Girls' line. In 2008 Billabong continued with the
consistent acquisition activity that occurred in 2007 and announced four
acquisitions over four successive months. Following the acquisition of the
Gold Coast store Kirra Surf in May, the company announced its acquisition of the
retail operations of Quiet Flight, a retail company on the east coast of the
US that had already been operating licensed Billabong and Element retail
outlets in Times Square, New York, US. The Quiet Flight deal resulted in the
addition of 14 Quiet Flight and Surf Warehouse retail stores, most of which
were located in Florida, US. Then in June 2008, the founders of the Sector 9
skateboard company accepted an offer from Billabong that also included the
purchase of the Gullwing skateboard truck brand. Finally in August,
Billabong confirmed the acquisition of boardsport accessories brand DaKine,
which specialises in backpacks, bags, gloves and accessories, in a press
release that projected that "DaKine is expected to contribute approximately 4%
of Billabong International Limited’s Group sales in the 2008-09 financial
year". Billabong's retail expansion continued
into late 2008 with the November purchase of the United Kingdom-based
13-store retail chain Two Seasons for an undisclosed sum. Billabong only
announced a single acquisition in 2009 with the purchase of Swell, a US-based
online retailer of boardsports brands, for an undisclosed sum.
Billabong commenced 2010 with the signing of a ten-year licensing deal
with popular skateboard company Plan B, and Plan B subsequently entered into a
partnership arrangement with Element. In May 2010, Billabong's retail expansion
continued with the acquisition of American surf retailer Becker Surf &
Sport in May, followed by the purchase of prominent Canadian action sports
retailer West 49 in late June. Further acquisitions were then announced in the
remainder of 2010: the acquisition of apparel brand RVCA was confirmed in July
and the label's founder Pat Tenore explained his decision in the Billabong
press release: "One of the key things about Billabong is its respect for the
creative independence of each of its brands and that level of flexibility
will allow RVCA to maintain its identity while benefiting from the support of the
wider Billabong group"; after RVCA, Billabong then returned to the retail
market and ended the year with the October acquisition of the Australian
retail stores Surf Dive ‘n' Ski and Jetty Surf—from vendor General Pants
Group—for an undisclosed amount. = Collapse=
On 16 February 2012, trading in Billabong shares was halted at the
company's request because of reports of a A$776 million takeover offer from TPG
Capital, a United States private equity firm.
On 17 February 2012, Billabong announced its intention to undergo a major
restructure. Up to 150 stores will be closed. 400 full-time jobs will be lost
internationally, including up to 80 in Australia. 48.5% of its Nixon watches
and accessories brand name will be sold to Trilantic Capital Partners to
establish Nixon as a joint venture. The partial sale will give approximately
$US285 million in net proceeds to Billabong. It is intended that proceeds
from the sale will be used to reduce debt. In February 2012, TPG Capital made
two takeover proposals which were both not accepted. Billabong announced that
Gordon Merchant, who owns 15% of the company's shares, had rejected both the
offers. On 27 August 2012, Chief Executive Launa
Inman presented her four-year plan to try to return Billabong to positive
sales growth and increase earnings. The plan included a range of measures with
the key focus being on simplifying the business, leveraging its namesake brand,
improving its supply chain and e-commerce offerings. The new
initiatives are estimated to cost approximately $80 million. In September
2012 two private equity firms, TPG Capital and Bain Capital, are bidding
for ownership of Billabong. = Takeover=
As of 5 June 2013, the company was yet to finalise a takeover deal with either
of the two American private equity suitors; however, a refinancing deal was
nearing completion as of this date. On 4 June 2013, Billabong stated that it was
unable to reach an agreement with US private equity funds Altamont Capital
Partners and Sycamore Partners, 16 months after the first takeover move
emerged. A media report published on 18 July 2013
conveyed that the takeover process had "exploded into acrimony", as two US
hedge funds contested the offer from Altamont Partners that was accepted by
the company on 16 July 2013. Acting together, the hedge funds claimed that
they had made a superior offer to the one that was accepted, whereby a
debt-for-equity swap was proposed that would result in a 60 percent stake in
Billabong. As of 19 July 2013, Billabong rejected the claim from hedge funds
Centerbridge Partners and Oaktree Capital, stating that the proposal in
question was conditional and could therefore not be accepted.
As of 23 August 2013, Billabong confirmed that is considering a rival
deal from US hedge funds Centerbridge and Oaktree after the company had
initially announced that plans to accept $US300 million loan from an Altamont-led
consortium. The two hedge funds offered a higher price than Altamont, as well as
a lower interest rate on a loan. Also as of this date, Billabong shares gained
6.8 percent, to 58.75 cents. A media report on 27 August 2013 stated
that Billabong will be moving ahead with the $US325 million refinancing proposal
from Altamont and Blackstone. As of the same date, Centerbridge and Oaktree were
actively pursuing Billabong directors in relation to their deal that they believe
is sifnificantly superior to the accepted proposal. The consortium also
claimed that they could finalise the details and a recapitalisation within a
brief time period, and would allow acting, Altamont-installed boss Scott
Olivet to remain if their offer succeeds. The company's chairman Ian
Pollard explained: We are nearing the end of a long process
that has caused distraction, impacted on staff morale and has been very costly.
The company looks forward to refocusing, reinvigorating its brands and rebuilding
the business on a solid, long-term financial footing.
Pollard stated on 29 August 2013 that the chance of Billabong considering the
Centerbridge and Oaktree consortium offer was low. At the time of the
interview, Pollard explained that Billabong's board is still evaluating
the proposal, but also stated that the board is hesitant to overlook the deal
brokered with Altamont and Blackstone. As of 21 September 2013, Billabong's
deal with Altamont was no longer valid, and the company was in the process of
seeking approval from shareholders to finalise an arrangement with
Centerbridge and Oaktree, and their affiliates. If brokered, the deal will
mean that the Centerbridge and Oaktree consortium will control most of the
company's senior debt, it will own up to 40.8 per cent of Billabong's shares and
will also be entitled to install three representatives on Billabong's board. On
21 September 2013, the Centerbridge and Oaktree consortium appointed new chief
executive Neil Fiske; as of this date, Billabong was also continuing the search
for a buyer for the Canadian skateboard retail chain West 49.
The company's sale of the West 49 retail chain was announced on 4 November 2013,
with fashion retailer YM Inc. identified as the buyer. West 49 will be sold for
approximately CAD$9–11 million, but Billabong has also entered into a
two-year non-exclusive wholesale agreement with YM Inc. worth
approximately CAD$34 million. The ownership of 92 West 49 retail stores,
located across Canada, will be transferred through the deal.
In January 2014, Oaktree Capital Management and Centerbridge Partners
refinanced Billabong's debt for a 40.8 percent ownership. Billabong
International, announced that it was selling, with the help of Guggenheim
Securities, its 51 percent stake in SurfStitch and its 100 percent stake in
Swell. = Profitability=
In 2000, the company was listed with sales of A$225 million that grew to
A$1.7 billion in 2011. Profits of A$249 million were achieved in 2007. For the
six months to 31 December 2011, Billabong experienced a 71 per cent drop
in net profit to A$16.097 million. In early 2013, Billabong revealed
earnings collapses across core business markets that "decimated its business".
Losses in the December half are A$536.6 million. A late August 2013 media report
stated "the Billabong label itself is now deemed essentially worthless,
according to Billabong's accounts" following the declaration of an A$859.5
million loss for fiscal year 2013. Billabong's brands were worth A$90
million at the end of June 2013 and on the morning of 27 August 2013, the
company stated that global sales of A$1.34 billion were down by 13.5 per
cent in reported terms for 2012-13. On 20 September 2013, the company's
share price fell to 42 cents, making it the worst-performing among the S&P/ASX
200. Teams
Billabong sponsors teams of riders in different subcultures who play an
ambassador-like role for both the brand and the corresponding lifestyle. As of
26 August 2013, a skateboard team is no longer listed on the website.
See also Billabong Pro Jeffreys Bay
Billabong Pipeline Masters Billabong Pro Teahupoo
Billabong XXL Tribal Gear
References External links
Official website Billabong Pro