BILLABONG BUYS SURF DIVE ‘N’ SKI

BILLABONG BUYS SURF DIVE ‘N’ SKI

LISTED board sports company Billabong International Limited will significantly increase its marketshare after today reaching an agreement to acquire a bunch of Australian retail assets from the General Pants Group.

The undisclosed deal includes 38 retail stores under the Surf Dive ‘n’ Ski (SDS) and Jetty Surf retail banners, along with two licensed Billabong stores. The company will retain both banners as multi-branded retailers. SDS is a significant player in coastal outdoor youth culture.

It follows a robust acquisition drive this year by the Gold Coast’s No.1 public company that has also resulted in the takeover of the 36-store Rush Surf retail chain in Australia and a number of Surfection stores in Sydney.

In a statement to the ASX, Billabong chief executive Derek O’Neill said the acquisition brought together two businesses with a strong heritage.

“SDS was one of Billabong’s earliest retail customers so we have had a strong working relationship over many decades,” he said.

“We entered acquisition discussions with the view to preserving the assets as core boardsport retail doors and ensuring a route to market for the Group’s strong portfolio of brands.”

O’Neill said the planned acquisition would strengthen Billabong’s retail business in Australasia, a region that already delivers the Group’s strongest retail EBITDA margins.

“There is good retail experience in the SDS and Jetty Surf businesses and this will complement what is already a strong retail management team in Australia,” he said.

“The acquisition presents the opportunity to extract significant synergies in areas including warehousing, distribution, back-office support and overall retail management consolidation.

“Additionally, direct retail operations greatly enhance Billabong’s visibility into the buying trends of the end consumer and assist in the speedy development and delivery of on-trend product to both Company-owned and independent retail accounts.”

Billabong’s global retail portfolio now comprises 558 retail outlets. It also owns brands including Von Zipper, Element, DaKine, Nixon, Sector 9, Tigerlily, Honolua, Kustom and Excel.

The newly acquired business is expected to contribute around 3 per cent of Billabong Group revenue in the 2010-11 financial year and is expected to be EPS neutral in year one.

BBG shares are today trading at $8.00.

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