Deutsche Bank has tipped Billabong International Ltd
(ASX:BBG) as a potential takeover target, according to The Australian.
The paper reports that Billabong is trading 30 per cent below 12-month highs, highlighting that the stock could be taken out below this level with a reasonable premium.
However, Deutsche Bank says a leveraged buyout of the surfwear retailer would not be for the faint hearted considering Billabong’s exposure to foreign currency and a roll out of stores still needing more capital.
Last month Billabong downgraded its 2011 first half net profit guidance because of weak sales, wet weather and a strong Australian dollar. The company now expects to this year deliver a flat result in constant currency terms.
In the 2010 financial year, Billabong International generated a net profit of $145 million.
