SURFSTITCH founders Lex Pederson (pictured) and Justin Cameron have extended their reach in the online retailing space by taking back full control of their company and buying Billabong’s (ASX: BBG) Swell business in a $35 million deal.
The move, widely expected by the surfwear industry for some time, is part of Billabong’s ongoing debt reduction strategy and plans to turn its attention to websites promoting its core brands.
Billabong owned 51 per cent of Surfstitch after taking a minority interest in the company in 2009.
But the buyout could see the Burleigh-based SurfStitch make a return to its hometown of Sydney following the severing of ties with Billabong.
SurfStitch did not respond to Gold Coast Business News’s requests for an interview.
It is understood the buyout deal was funded by private equity, with industry rumours suggesting an involvement by TPG.
“This is the next natural step for our global market-leading ecommerce operations,” says Cameron in a statement released by Billabong to the stock exchange.
“Today’s agreements will allow both parties to pursue their strategic vision.”
The Los Angeles-based Billabong CEO Neil Fiske, in his first statement to the market since Billabong’s half-year results were announced in February, says the sale is part of the company’s seven-point turnaround strategy announced in December.
He says Billabong and SurfStitch will maintain a relationship following the sale which will see Billabong supply products to the ecommerce businesses.
‘’In recent months we have begun the process of taking over the branded websites previously outsourced to SurfStitch,”says Fiske in the Billabong statement.
“With these agreements we can accelerate our investment in the online presence and digital marketing of brands such as Billabong, RVCXA and Element, which will engage our core consumers and in turn benefit the wider business.
“We believe there is an enormous untapped opportunity here for the company.
“I’m pleased that through these agreements we will also continue the constructive relationship we’ve had with SurfStitch as they enter an exciting new era for their business.”
Billabong says the sale will boost the company’s net earnings, although the extent of the contribution will depend on future sales through SurfStitch under the new supply agreements.
The SurfStitch buyout involves both the Australian and European divisions of the company. The US-based Swell was fully owned by Billabong.
Pederson and Cameron are said to have been seeking to break out from under the Billabong umbrella for some time.
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