Today’s best headline

Today, Billabong (BBG.AX) founder, major shareholder and board member, Gordon Merchant, has said he will entertain a takeover bid for BBG even if it’s at a lower price that the prior bid.

Geez, Ya reckon??

After rejecting a $3.30 offer and holding out for a bid preferably above $4.00, Mr Merchant now sees his stock trading at $1.00.

Dear Billabong,
I will bid for the whole company at 28 cents per share, on a pre excessive offensive dilutive capital raising basis.

Lesson: You don’t normally command a premium when you are desperate to sell.

This Is How Director’s & Board’s Protect Their Salaries

The stock price of Australian surf retailer, Billabong (BBG.AX) has declined from $10, two years ago to its current price of $1.83. Excuses for it’s woes have been blamed on slow economic conditions and weak consumer demand. The blame should be placed on management.

Whether it has been ill-conceived ideas to expand into their own branded stores or a belief that consumers will continue to buy T-shirts for $60 simply ’cause the word “Billabong” appears across the chest should have been a warning to investors. Management should have occasionally wandered from the warmth of their offices to see what their market looked like.

When 45 year old dad’s make up the majority of the people wearing your clothes, something is wrong.

What else is wrong is…… how, in mid-February 2012, whilst the stock price is trading around $1.45, Billabong rejected an unsolicited cash takeover bid from private equity firm, TPG, for $3.30 per share.

Today, Billabong’s is nearly doubling its shares on issue by selling 221 million more shares at a price of $1.02!!!

Have the director’s and board acted in the best interest of their shareholders?
Are they responsible and competent stewards of the company and it’s shareholder’s money?
The regulatory bodies should get busy with some investigating!

Somebody, please, throw in the use of brilliant phrases such as “best practices” and “corporate governance” before shareholders launch a class action lawsuit.

I wonder if board members were paid in shares, (rather than cash) if they would have made a different decision?

Not to be lost in my critique, we should also consider how bad TPG is at valuing this investment at $3.30 per share, only 4 months ago.

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