SURFWEAR group Billabong has all but agreed to a cut-price buyout offer from former director Paul Naude, bringing its 14-month takeover saga to a head.
The embattled group, which has faced five takeover bids since February last year, has entered exclusive talks with Mr Naude over an offer of just 60c a share.
Under Mr Naude's proposal, shareholders will have the option to convert their investment into shares in a new company affiliated with his backer, Sycamore Partners.
Billabong said founder Gordon Merchant and fellow director Colette Paull had agreed to roll their shares into the new company if the buyout went ahead.
Billabong mulls over takeover bid
Mr Merchant owns 14.9 per cent of Billabong and Ms Paull has a 1.17 per cent stake.
The takeover offer values the group at $287.4 million. While it offers some certainty after more than a year of haggling and failed takeover tilts, it is a far cry from the $843 million offer made for the group early last year.
That bid, lobbed by US private equity group TPG, was rejected by the Billabong board as too low.
None of the four subsequent offers for the struggling company came close, with Billabong's share price dwindling as profitability plunged and the group launched an unpopular capital raising.
Its shares dived a staggering 76 per cent from $3.08 on the day the board rejected TPG's offer in February 2012, to 73c when a trading halt was called last week.
The shares reached $18.51 at their peak in May 2007.
Mr Naude's 60c-a-share offer is a 45 per cent discount on the $1.10 he offered in December, which was soon matched by a consortium made up of US private equity firms VF Corporation and Altamont.
IG Markets market strategist Evan Lucas said Billabong shareholders would feel shortchanged.
"It certainly means that due diligence has thrown up some very big warning flags to the consortium," Mr Lucas said.
"It doesn't bode well for where Billabong sits."
Billabong has granted Mr Naude and Sycamore 10 business days for exclusive talks and to allow accountants to further analyse the company's earnings.
It said no binding agreement had been entered into, and an update will be given at the end of the exclusivity period.
Billabong made a loss of $537 million for the six months to December. After TPG's offer was rejected last February, the group returned in July with a $695 million bid, matched in September by US rival Bain Capital. Both TPG and Bain withdrew after examining Billabong's books.
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