Billabong takeover...revisited

So the saga continues..Billabong was forced to announced that the potential acquirer, TPG, had "concerns" about its A$694 million bid. These "concerns" were not elaborated by Billabong.

 Lets have a short recap here to keep the facts fresh in mind. Earlier this year in February, Billabong rejected an offer of A$3.00 a share from TPG. Billabong then proceeded to negotiate the sale of its Nixon brand to Trilantic Capital Partners. Not put off, TPG came back with the same offer of A$3.00 which was later raised to $3.30. The company still fought off the takeover with founder and major shareholder, Gordon Merchant stating they would not consider a bid less than $4.

Share prices continue to drop and hit below A$2.00 in June. The company then decided to increased its issued capital by 86%, issuing shares at a heavy discount to raise A$225 million to pay debt. The placement was done at A$1.02 and the take up was only 79%.

 In July, TPG again made a bid for Billabong at the share price of A$1.45. There was another unconfirmed party that showed their interest in bidding for Billabong as well, rumoured to be Bain Capital. They have walked away from the deal last month. Share price for Billabong is now, A$1.06 If we calculate the returns using MA Manager,

We would get fantastic returns with very low risk, however we must keep in mind that the performance for Billabong has been deteriorating with the most recent a reported loss of A$246 million. This is the first loss since its listing in 2000. So it would be prudent to assume that Billabong's share price would take another huge dip if TPG walks away.

I would think that TPG would not want to walk away given the time and effort they have put into this. Someone must love this brand from within TPG, else it would not have made sense to me. However, I believe TPG will try to negotiate a lower price for the takeover circa -20-25%% of current takeover prices.

I will be taking a position in this.