BUSS4 - Bullet point 5 the impact on stakeholders

Bullet Point 5 for the research tasks asks students to examine the impact on, and reaction of, stakeholders to takeovers and mergers. Worth having a quick look at today’s news story about Billabong who have been struggling in the consumer downturn. This time last year their shares were trading at 9Australian dollars. However recently they have warned that their revenues are down by as much as 25% for the first half of the year, and that their debt has been increasing - think about the impact on ratios such as ROCE and gearing, and shares had fallen to A$1.79 - not good for shareholders as a stakeholder group.

Yesterday, TPG Capital offered 765m Australian dollars ($823m; £520m), or A$3 per share, to takeover Billabong. Billabong counteracted by announcing plans to close unprofitable stores and cut jobs, and also to sell a stake in its Nixon brand in order to help repay their debt. That asset sale would break the conditions imposed in the offer from TPG, but the restructuring plans and interest in takeover has driven their share price to rise to A$2.93 as a result. Not exactly back to the A$9 mark, but a positive impact for shareholders.

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