Billabong has a secret that’s scaring investors away.
The embattled surf retailer is loaded with debt and multiple private equity firms have swooped in to try to buy the company.
But, so far, they’ve walked away — after doing weeks of due diligence.
First it was Bain Capital. Now, TPG Capital has formally withdrawn its proposal. Neither company elaborated on the reasons why they pulled out.
What exactly is going on here?
Tim Montague-Jones, a senior equities analyst with Morningstar, explains to Women’s Wear Daily:
“We’ve had Bain Capital walk away after two weeks of due diligence, now TPG after six weeks of due diligence, due to ‘issues’ and the company hasn’t disclosed what these issues are.
After going through the books TPG has obviously discovered something but obviously these companies have signed confidentiality agreements. What they’ve uncovered must be a material issue, for them to change their opinion so drastically on making a bid on public information and walking away on private information.”
Billabong shares in Sydney plummeted as much as 18 per cent today, and closed down 16.9 per cent.
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