Billabong backs away from Rip Curl

Rip Curl has remained focused on the sale of surfing-related products while Billabong has headed down the mass market route.

A potential plan by the backers of listed surf wear company Billabong to buy its rival Rip Curl is believed to have collapsed with the group now understood to be in talks with a prospective buyer based in the US.

It is understood that major shareholders of Billabong, which counts global hedge funds Oaktree and Centrebridge as its largest investors, were planning to buy the company in recent months, but those talks have now ended.

Rip Curl has remained focused on the sale of surfing-related products while Billabong has headed more down the mass market route.

It is understood that the surf wear label has opted to focus on the mass market and allow Rip Curl to remain a dominant force in the premium end, which has been the reason for it to step aside from the negotiations.

Interestingly, sources say private equity firm Quadrant was close to reaching a deal to buy the operation, but sources close to the buyout fund are denying it was a potential suitor.

Boutique advisory firm Gresham is working on the sale.

Rip Curl is still controlled by founders Doug Warbrick and Brian Singer, who jointly own 72 per cent of the company. They started the business in 1969 at Torquay, Victoria, initially producing surf boards before moving into wetsuits.

The company’s third-biggest shareholder is Francois Payot, who helped create Rip Curl’s European business. Now Rip Curl employs 2,653 people and manufactures wetsuits, snow apparel, watches, footwear, cloths and accessories.

In addition to Rip Curl’s Australian operations, the company also has licence agreements with international entities, which manufacture and distribute Rip Curl products in South America, North America, Europe and Asia.

When Rip Curl was for sale in 2013, the owners were hoping to secure $400 million for the business through a sale or float, but two years later, it was valued at $310m when the board approved a share buyback from former executives.

The group generated $485m of revenue in the past financial year and some estimate that it could sell for as much as $450m.

Meanwhile, market analysts said today that Brett Blundy’s acquisition of a 12 per cent interest in the listed footwear retailer RCG was likely to be linked to his business relationship with director and co-chief executive Daniel Agostinelli.

The pair have previously worked together over many years.