TPG walks away: Things just got even worse for Billabong

The rumours were true.

Embattled surfwear giant Billabong today announced that private equity firm TPG is no longer interested in $1.45 a share a takeover of the company.

TPG’s decision, coming after six weeks of due diligence, has pushed the share price to record lows. At 11am, the stock had lost 14.43% of its value, going for 82 cents.

The share price fell 23% earlier this week when rumours of TPG’s wavering interest hit the market.

TPG’s decision must be especially galling for Billabong founder and board member Gordon Merchant. In February this year, he was notoriously responsible for Billabong rejecting a takeover offer from TPG at $3 a share. He said at the time the company was worth at least $4 a share.  The share price is now $1.02.

Last month, hopes of a bidding war for Billabong were dashed when another private equity firm, Bain Capital, decided not to pursue the company after a short period of due diligence. This left TPG the only immediate hope for the company’s suffering shareholders keen to recoup some of their losses. That hope is no more.

In May, the company bought in Inman to replace its CEO of 20 years, Derek O’Neill. Inman, previously an executive at Target, in August unveiled a plan to revive the company’s fortunes.

It focused on marketing to convert  Billabong’s broad brand awareness into sales, as well as reducing product lines to those most profitable. That plan is all Billabong has left, increasing the pressure on Inman to create a recovery in the face of much scepticism.